Days after the closure of the Amazon-Future Group deal, the companies have laid out their long-term business strategy. The agreement includes synergies that could be a win-win for both the entities.

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The two-part agreement allows Future Retail products to be exclusively listed on the Amazon India marketplace. It also allows online distribution of Future Consumer's FMCG brands on Amazon.

"This collaboration will drive synergies through FRL’s well-entrenched consumer-centric national network and Amazon India’s tech-enabled distribution footprints. As part of the agreements, Amazon India will become the authorised online sales channel for FRL stores and FRL will ensure the participation of relevant FRL stores on the Amazon India marketplace, and its programs," the companies said in a joint press release.

The agreements focus on online sale and distribution of grocery and general merchandise which includes beauty categories. It also includes focus on fashion and apparel, footwear, jewelry, watches, luggage, travel gear, eye wear, perfumes, and related accessories.

The agreement also involves two-hour delivery for online orders.

"FRL will list on the Amazon Prime Now program, allowing customers to get food, grocery and general merchandise delivery within two hours in Delhi, Mumbai, Bengaluru, and Hyderabad," said the release.

The services have been rolled out in 22 stores as of now and the companies will follow a rollout plan for all the stores based on a mutually agreed timeline.

"Amazon and Future Retail share common values of serving customers everywhere in the best possible manner,” said Kishore Biyani, Chairman and Managing Director, Future Retail Limited. “This arrangement will allow us to build upon each other’s strengths in the physical and digital space so that customers benefit from the best services, products, assortment and price.”

“We are excited about the business collaboration with FRL. FRL’s national footprint of stores offering thousands of products across fashion, appliances, home, kitchen and grocery will now be available to millions of customers shopping on Amazon.in, in hours across 25+ cities,” said Amit Agarwal, SVP and Country Head, Amazon India.

Last week, Future Coupons, a promoter group entity of Future Retail had received Rs 1500 crore from Amazon for 49 percent stake in the company.

Stake acquisition

The competition commission of India (CCI) gave Amazon approval to acquire a stake in Future Coupons in November 2019. "The proposed combination pertains to the acquisition by the acquirer (Amazon.com NV Investment Holdings) of approximately 49 percent of the voting and non-voting equity shares of the target (Future Coupons Ltd)," CCI said in its order.

Future Coupons holds 7.3 percent stake in the Future Retail. This means that Amazon will effectively hold 3.58 percent indirectly in Future Retail. The promoters of Future Group entered into an agreement with Amazon in August 2019. As per the deal, Amazon agreed to buy 49 percent stake in Future Coupons and was also granted a call option. This option allows Amazon to acquire all or part of the promoters' shareholding in Future Retail if permitted by law. This call option is exercisable between the third and tenth years.

Future Group is likely to use funds from Amazon to pare debt. Future Retail’s current debt has been estimated in the range of about Rs 3000 – 3500 crore. Future Retail, which runs Big Bazaar, FBB, Foodhall, Easyday Club and Heritage Fresh, has been working on improving operational efficiencies at the company level.

First Published:Jan 6, 2020 3:40 PM IST