Amazon Makes More of More

The grocery expansion that benefits a certain 48% stakeholder.

In cities like Guntur and Hubli, the unassuming storefronts of More supermarkets seem a world away from the high-stakes battles of global e-commerce. Yet they are the linchpin in one of retail’s most calculated corporate strategies. These stores are the local face of Amazon’s patient conquest of India’s $600 billion grocery market, a prize that has long frustrated foreign players.

The strategy is a direct response to India’s notoriously tangled rules on foreign direct investment. For decades, regulations have prevented overseas firms from owning a majority stake in multi-brand retailers, a policy designed to protect the country’s 13 million family-owned kirana stores and their 40 million employees, who happen to constitute a vote bank no government dares to antagonize.

This protectionist stance has thwarted the ambitions of giants including Walmart and, most pointedly, Amazon. So in 2019, Amazon engineered a workaround. Alongside Samara Capital, an Indian private-equity firm, it acquired a majority stake in More Retail from the Aditya Birla Group for $580 million. The structure is a masterclass in regulatory navigation: Amazon holds a 48% stake in the parent company, just shy of the controlling threshold, making it an immensely powerful shareholder rather than a direct owner.

The timing of Amazon’s patient positioning through More takes on new significance as Washington increases pressure on New Delhi to liberalize its markets. US Commerce Secretary Howard Lutnick declared last week that India must “open their markets, stop taking actions that harm America” and warned that countries wanting to sell to US consumers need to “play ball with the president of the United States.” His intervention followed a high-level Indian delegation’s visit to Washington led by the Indian Commerce Minister Piyush Goyal, where both sides discussed expediting a Bilateral Trade Agreement — negotiations that invariably include American demands for greater market access in retail.

Amazon’s deal has become the foundation of a profound strategic pivot for More Retail, which is quietly being reshaped in the global giant’s image. The core of the transformation is a shift from a simple brick-and-mortar chain to a hybrid logistics network. And this integration is already yielding results.

Nearly a quarter of More’s 45 billion Indian rupees ($540 million) in sales now flows through Amazon’s online platform. Stores integrated with Amazon Fresh, Amazon’s online grocer business, boast monthly sales of 5.6 million Indian rupees, a 60% uplift over their offline-only counterparts while maintaining identical 7.5% EBITDA margins. The plan is to accelerate this rollout to reach 3,000 stores, turning More’s physical locations into mini-fulfilment centres for Amazon even as the company’s employee costs have mysteriously declined from 9.4% to 7.9% of sales since FY20.

More’s second pillar is a deliberate push into India’s heartland, which Amazon has struggled to reach on its own. While rivals like DMart and Reliance Retail wage a costly war in hyper-competitive megacities, 70% of More’s 819 stores are in smaller, “upcountry” towns. Management presents this as a shrewd move into areas where organised retail penetration is a mere 6-11% and rents are 30-40% lower.

Yet it could also be seen as Amazon’s attempt to bide its time, particularly as quick-commerce giants Blinkit, Zepto and Swiggy Instamart race to set up thousands of dark stores in urban cities. It is a bet on a less-tested thesis about consumption in smaller towns where 65-70% of India’s incremental middle-income growth will emerge through 2028, per analyst hopes.

To lock in customers, More is leaning on a third pillar: a surprisingly effective loyalty programme. For an annual fee of just 199 rupees, members receive a 5% cashback on most purchases. The scheme has attracted 1.8 million subscribers who now account for nearly two-thirds of sales, spend 2,400 rupees monthly (compared to 1,200 rupees for non-members) and have a 94% renewal rate among high-value customers.

For More, this creates stickiness. For Amazon, it provides a rich stream of purchasing data from a demographic it cannot legally access directly.

Taken together, these strategies reveal a company becoming inextricably entwined with its American backer. More is effectively outsourcing its digital future to Amazon and betting its physical footprint on less-proven markets. In return, Amazon gets a proxy army in the battle against domestic behemoths, invaluable consumer data and the foundations of a nationwide supply chain positioned to capture the 31% annual growth More projects through 2031.

Should India yield to American pressure and relax its FDI rules — a prospect that becomes more likely with each bilateral trade negotiation — Amazon would be in prime position to consolidate control over an already integrated operation spanning 394 cities. The shoppers in Guntur may not know it, but every bag of rice they buy helps an American titan stock its shelves for the future of Indian retail, a future that Washington seems increasingly determined to help unlock.