Amazon has made its first investment in brick-and-mortar retail in India.
On Monday, the board of Shoppers Stop Ltd. approved an investment by Amazon.com NV Investment Holdings Inc., giving the e-tailer a 5 percent stake for approximately $26.4 million. Amazon India has a war chest of $5 billion for expansion and growth in India and has been upping its game quickly over the last two years.
On Monday, Shoppers Stop share prices rose 20 percent, to 500 rupees or $7.50.
Shoppers Stop is the biggest — and oldest — department store chain in India with more than 80 stores across 38 cities, and is the market leader in the apparel and beauty segments. The company also operates stand-alone beauty stores for MAC, Bobbi Brown and Clinique for Estée Lauder.
The transaction sets the scene for growth on both sides: boosting revenue for Shoppers Stop and giving Amazon access to its customer base. “This partnership with Amazon will accelerate our revenue from online sales, which we expect will double every year for the next three years,” said Govind Shrikhande, managing director of Shoppers Stop. He said it would also help the department store chain step increase its reach in the fashion segment, as Amazon users would have access to the 400 brands in department store’s catalogue.
With this deal, Shoppers Stop will also have an exclusive flagship on Amazon’s Indian site to showcase its entire portfolio.
“We believe it will be a multiplier effect,” Shrikhande said. “The traffic that Amazon.in gets is much larger, and this collaboration will drive consumption across categories.”
Amazon has been pushing its ability to offer customers the “touch and feel” experience. Earlier this month, Amazon India inaugurated a 44,000-square-foot fashion studio called Blink in Gurugram, India. The company has similar facilities in London and New York. The deal with Shoppers Stop will help the e-tailer reach more consumers physically — with their experience centers being set up in all the Shoppers Stop stores. It will also keep the retailer moving toward its mandate to grow online sales to 10 percent by 2020, up from the present 1.2 percent.