Farm to Fork – How Amazon India is rethinking quick commerce

Amazon India is revamping its India business with a much bigger focus on quick commerce. Unlike the leaders like Blinkit, Zepto, and Instamart; Amazon India is focusing more on the farm than on the fork. Why does that matter?

An interesting anecdote on retail focus

Reliance chairman, Mukesh Ambani, once shared an interesting account of his brief meeting with Nandan Nilekani at a coffee shop in the US to discuss his retail plans. This was before Reliance Retail had been launched with a lot of fanfare. According to Ambani, being a coffee shop, Nandan Nilekani took a bunch of tissue papers and explained that for food and groceries, his focus must be at the farm (back-end). In short, procurement would be the key to retail ambitions in India and it is also less crowded. Reliance did follow that idea, but now Amazon India is taking that to a new level altogether.

Procurement is the first big puzzle to solve

To focus on its quick commerce expansion, Amazon India is focusing substantially on procurement. The entire grocery business is not just about how many dark stores you have. That can offer quick and efficient delivery to a limited cluster. If you are looking at a much larger area like 200-300 cities (metros and non-metros), then the focus has to be less on dark stores, and more on procurement, cost, and quality. Amazon is creating a network to procure produce from more than 16,000 farmers directly. In the process, they will bypass the traditional wholesalers (mandis). The setup will be supported by Amazon Cloud and AI strengths. That could even make quick commerce profitable.

Focusing on hyperlocal logistics

When it comes to fruits, vegetables, and groceries; proximity to sourcing centres, quality of movement, grading, pricing will be material factors. Currently, Amazon is procuring over 70% of its fresh produce from within 200 KM of its final destination. That is where agronomy and price support for farmers becomes critical. For example, like its mango collection centres in Maharashtra, Amazon India offers farmers fair grading, evaluation, and payment on the spot. In addition, agronomy services offer farmers access to ML-based scientific crop planning and real-time weather updates to improve crop yields. This is supported by a string of cold chains to ensure fresh movement and delivery.

Big focus is on the farm rather than the fork

It will be a 3-tier structure for Amazon India. At the first level, the Kissan Store will help farmers to buy seeds, farm protection products and also eventually sell their produce directly to Amazon with scientific grading done. Secondly, these products will be directly fed to Amazon Fresh stores through a cold-chain logistics network. Thirdly, urban fulfilment centres will take care of the quick commerce piece of the story. It is a daring model, not because it is aggressive, but because it is focused more on the farm than on the fork. Amazon’s logic is that dark stores will saturate growth, while a farm focus can make the growth limitless. Probably, Amazon is bang on target !