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Amazon to acquire 5% stake in offline retailer Shoppers Stop

K Raheja Corp Group owned retail chain Shoppers Stop Limited has entered an Investment Agreement with Amazon.com NV Investment Holdings LLC to sell 43,95,925 equity shares or about 5% stake in the company for Rs 407.78 per equity share or Rs 179.25 crore. Shoppers Stop’s Board of Directors have approved this stake sale, and on October 18 the matter will be brought up in front of shareholders for their approval.

Shoppers Stop will be using the funds raised through this minority stake sale to further expand its physical and online retail biz, plus it has tied-up with Amazon Seller Services Pvt. Ltd. (Amazon’s India unit) to sell its in-house brands on the e-commerce marketplace through a dedicated microsite, according to this Livemint report. It’s worth noting that some of the in-house brands such as Haute Curry and Kashish are already selling on Amazon. It’s not clear when this microsite will go live.

“We are seeing a big jump in online growth during the quarter. It has gone up by 70% and all our steps for omni channel including OMS, WMS, MTM, ESB, are in place now and we believe by September-October, we should be able to start omni channel across India. We already done some trials across the few stores already,” said Shoppers Stop’s Managing Director Govind Shrikhande, during the company’s earnings call.

Shoppers Stop business highlights (from earnings call and annual report)

– As of now 80 stores in the Department Store business; 50 in the Crossword business which is directly operated; another 45 odd which are operated by franchisees; 16 stores under the HomeStop banner; the Beauty business under the M.A.C, Clinique, Estee Lauder, Bobbi Brown, has 82 doors including shopping shops; HyperCity has 19 doors after the closure of Pune Pacific store in Pune. Overall, 247 stores spread across 5.8 million square feet in 38 cities.

– Membership (like Amazon Prime): First Citizen members club has crossed 48.90 lakh members. Their contribution to sales was 77% for the year.

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– Crossword Bookstores Ltd, the wholly owned subsidiary, has chain strength of 88 stores across the country. The revenue of the company in the year under review was Rs 109.2 crore as compared to Rs 98.23 crore in the previous year. Crossword has posted a net loss of Rs 4.22 crore for the year under review, against a net loss of Rs 3.20 crore in the previous year.

Souq.com acquisition: In July this year, Amazon acquired Dubai-based ecommerce company Souq.com for $580 million. Following the acquisition, Amazon users were able to log on to Souq.com using their Amazon credentials, and both companies planned to merge their services and operations, especially on the Amazon Global Seller segment. This came weeks after Amazon confirmed that it would acquire groceries chain Whole Foods Market Inc. for $13.7 billion.

Amazon’s investments in India

Currently, Amazon’s total investment commitment in India stands at $5 billion: the $3 billion announced in June 2016, plus the $2 billion investment announced back in July 2014, which the company has already completed in phases over the past two years.

Since the announcement of the additional $3 billion investment in June 2016:

  • The India unit’s payments arm Amazon Pay received funds worth Rs 67 crore in May 2017, and an additional Rs 130 crore in July 2017.
  • Amazon India’s logistics arm Amazon Transportation Services (ATS) had received Rs 207 crore worth of funding, in June this year, which was the second tranche of funds infused into ATS in less than a year, after the Rs 67 crore it had received in September 2016.
  • Amazon invested a further Rs 341 crore into its Indian subsidiary Amazon Wholesale (India), which is the B2B arm of Amazon India in July 2017, following the Rs 115 crore pumped into the wholesale business in September 2016.
  • Amazon’s investment in its India unit: Rs 1,350 crore in June 2016, Rs 2010 crore in November 2016, and Rs 1680 crore in July 2017.

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