It was a partnership waiting to happen. On one side was India’s largest chain of fashion department stores, Shoppers Stop. And on the other was, well, Amazon.
One was the pioneer of modern fashion retail in India. And the other was, well, Amazon.
One needed the scale, understanding and tactics to become an “omni-channel” retailer (retailers selling through multiple touch points both online and offline). The other, well, Amazon, wanted a better understanding of India’s fashion market. In fashion, Amazon was a laggard behind Walmart-owned Flipkart, which ran circles around it using three distinct brands and operations—Flipkart fashion, Myntra, and Jabong.
And so it was that in September 2017, Amazon invested $24.8 million (Rs 180 crore) in Shoppers Stop.
Both partners shook hands on three win-win mutual objectives.
One, Shoppers Stop wanted to sell its private labels globally, through Amazon. Two, Shoppers Stop wanted to be a preferred seller on the platform. And three, the two would work together to craft a common omni-channel strategy, helping Shoppers Stop sell more of its products online.
A year and a half later, Shoppers Stop seems to have achieved the impossible—it’s worse off on many of those areas than before the deal.
Its share of omni-channel sales is still below 2%, nowhere near its 2020 goal of 10%. In its email response to The Ken, Shoppers Stop claimed that events like demonetisation and the implementation of the goods and services tax have hampered their omni-channel growth. It has also been forced to halt the sale of its products via Amazon.in because of new Indian regulations which prohibited e-retailers like Amazon from selling products of companies in which they have an equity stake.
And then there’s private labels, Shoppers Stop’s great global hope. The contribution of private labels to its overall revenue has dropped from 14.7% in the quarter preceding the Amazon partnership to 12.2% in the quarter preceding the company being forced to stop selling on Amazon.in. This is according to data from brokerage firm IIFL Securities.
“At an overall level, the execution [of the deal] seems to be far behind the original thought,” said a former Shoppers Stop executive who was part of the deal-making process.
Well, that’s one way to put it.
The executive requested anonymity, citing the sensitivity of the deal.
Shoppers Stop’s original choice wasn’t Amazon. Around the time it was in talks with Amazon, it had also tried to talk to Chinese e-commerce giant Alibaba, claims the Shoppers Stop executive quoted earlier. But either it couldn’t get through, or Alibaba wasn’t interested.