The Foreign Investment Promotion Board (FIPB) has approved Amazon’s proposal of setting up a wholly owned subsidiary (WoS) in the country to undertake the business of online market place operator and retailer inter-alia courier services. This approval will allow Amazon to bring in foreign investment up to Rs 15 crore in order to set up its own courier service. More significantly, this could also pave the way for the company to setup its own logistics operations for retailers who are onboard Junglee.com.
In January, Amazon had made its much anticipated entry into the country through Junglee.com which was positioned as an “Advertising service” but was essentially a price comparison engine that aggregates similar products from different retailers at a single place.
The company also had recently set up its first fulfillment centre in Mumbai, India as noted by Reuters and has had few software development centres in Bangalore, Chennai and Hyderabad from quite a long time. While, we still don’t know if the company has a plan in place to launch as an independent e-retailer, since multi – brand FDI in retail was put on hold by the Indian government, setting up its own logistics will give Amazon an edge over smaller players when it eventually does.