The Amazon's investment arm buying five per cent in Shoppers Stop is expected to be a win-win deal for both, say consultants and analysts.
Shoppers Stop on Saturday said it will raise Rs 180 crore by selling 5 per cent stake to Amazon.Com NV Investment Holdings. As part of the deal, Amazon experience centres, which let customers test out the products available online, will be set up across Shoppers Stop’s stores.
"Since Flipkart has got a lead in mobile phones, Amazon has to do something different to move ahead. They can launch mobiles and other categories at shoppers stop stores where customers can feel the products," said Arvind Singhal, chairman at retail consultancy Technopak Advisors.
"Shoppers Stop can also get a lot of traffic to its stores besides being able to sell its private labels globally," Singhal said.
Abneesh Roy, Senior Vice President - Institutional Equities - Research Analyst at Edelweiss Securities said the Shoppers Stop-Amazon India tie-up, in their view, places Shoppers Stop at vantage point to reap benefits from its partner’s enviable digital presence wherein: "Shoppers Stop management expects Rs 200 crore sales from digital post the tie-up with Amazon and 6-8 per cent EBITDA margin in FY19," Roy said.
We expect Shoppers Stop to leverage Amazon India to increase its private label contribution (16.4% in Q1FY18). "Having Amazon India as an investee will boost the confidence of SSL’s investors," he said.
Raman Mangalorkar, chief executive at Atom Data Labs said: "Amazon is testing waters in Indian retail. They want to know what is happening and then expand the business. They are doing the same all over the globe."
However, for Shoppers Stop, he does not think there is any direct benefit. "One can argue they can list their private tables but that they can do without the deal also," he said.