Security guards stand at the reception desk of the Amazon India office in Bengaluru.Reuters/AbhishekChinappa
The partnership between Amazon and Kishore Biyani’s Future Group is in trouble as the online retailer has reportedly asked the offline retailer to bear a part of the burden of discounts being offered to customers.
Amazon’s proposal is likely to be discarded by Biyani as the Future Group is not interested in offering steep discounts on products it sells, sources familiar with the matter told The Economic Times.
E-commerce companies have recently come under pressure to turn profitable as they burn through huge sums while offering discounts to customers to attract them to online shopping.
“Discounts should be the first thing to be discussed. What priority pricing Future will give to Amazon, what price differentiation will work between offline and online should be the first things to be discussed,” said Harminder Sahni, founder of retail consultancy Wazir Advisors.
The Amazon-Future Group partnership was “nothing more than a headline-grabbing proposition to begin with”, he said.
US-based Amazon also wants to end the partnership with the Future Group, and has asked it to list its private-label items as other vendors do.
“Amazon.in is in a close relationship with the Future Group in many businesses, including their private-label business. Like with many other brands and sellers, Amazon.in has a marketing arrangement with the Future Group to provide visibility to its brands online on Amazon.in,” an Amazon India spokesperson said.
The partnership between the two companies was announced in October last year to sell the Future Group’s portfolio of brands on Amazon’s platform in India.
Despite having a tie-up with Amazon, Biyani kept criticising e-commerce firms for their huge fund-raising from foreign investors.
“They (online retailers) sell to consumers. They are violating the law (on overseas investment) in spirit and in letter,” the founder of the Future Group had said in May last year.