Amazon India is going aggressive with its grocery business and is expanding the warehousing and other infrastructure facilities for this. Some of these facilities include specialised arrangements, like cold storages to facilitate storing of perishables. The warehousing facilities have been beefed up for local delivery in Delhi, Mumbai, Bengaluru and Hyderabad where Amazon Now is currently present. A total of 15 such warehouses have been opened in these four cities.
In terms of sheer numbers, Amazon has, by now, setup 56 fulfilment centres occupying a total of 13.5 million cubic feet of warehousing space. These are spread over 13 states. Of this, the portion occupied by Amazon Now, – the dedicated hyperlocal delivery grocery business, is 120,000 cubic feet. The cold storage or temperature-controlled zones, within these warehouses will be able to handle items like vegetables, fruits, dairy products and frozen products. Without these specialised facilities, Amazon was dependent on Hyper City for these last-mile deliveries. And with these 15 fulfilment centres in place, Amazon expects to offer a whopping 5,000 items encompassing all these categories on its site.
Amazon Now will be the vehicle through which the food retail and other perishable products will be sold online and Amazon Retail, specially set up to meet the government regulations, will be the seller on its platform.
The business in this product range is quite different from the normal product lines Amazon has been dealing in. The margins are limited in scope and the last mile delivery model could be quite expensive proportionate to the volume/value of individual orders, throwing up huge challenges. Competition, in this case from companies like Flipkart, has also to be factored into.