Retail Wars: Amazon Sends Legal Notice To Indian Partner As It Seeks To Meet Challenge From Reliance Retail

Amazon has gone on the offensive to maintain its position in India's $1 trillion retail market after Reliance Retail, a rising competitor and the biggest retail chain in the country, moved recently to snap up the business of the Seattle-based retailer's local partner in India.

Amazon served a legal notice to Future Group, accusing the company of breaching a non-compete-like arrangement in their contract by selling its retail, wholesale, and logistics business to Reliance Retail. Future Group had more than 1,500 stores in over 400 cities as recently as the first half of 2020, TechCrunch reported. Amazon leveraged this vast network by becoming the official online sales channel for Future Group's retail stores. Amazon has no offline stores in India.

Amazon's growth plans for the Indian market could be hurt if Future Group's sale to Reliance goes through. Reliance, owned by India's richest man Mukesh Ambani, is emerging as a strong challenger to Amazon in India's retail sector by raising funds in a bid to compete in both online and offline formats. Walmart-owned Flipkart is Amazon's biggest competitor in online retail in India.

Kishore Biyani-owned Future Group announced the sale of its retail and wholesale business to Reliance Retail in a deal valued at $3.4 billion in August. According to a report by ET Now, Amazon's earlier deal restricted Future Group from entering into deals with certain firms, gave it a 3.58% stake in Future Retail, and the right of first refusal to purchase more stake in Future Retail.

"We have initiated steps to enforce our contractual rights," PTI quoted an Amazon spokesperson as saying. "As the matter is sub-judice, we can't provide details."

Ambani’s Reliance Retail was founded in 2006 and it serves more than 3.5 million customers every week, who it serves through 12,000 stores in more than 6,500 cities across India. It recently raised $5.14 billion by selling stakes to General Atlantic and Singapore-based GIC. Reports said in August that Ambani had offered a $20 billion stake to Amazon in its retail business; Reliance denied those reports.

The U.S. retailer has spent more than $6.5 billion in India since it set up shop in 2013. With a potential 1.3 billion consumers, India plays an important role in Amazon’s global expansion plans.

The Reliance-Future deal is awaiting approvals from regulators.