This comes as the antagonism of some bricks-and-mortar businesses for online retail fades with the realization that cooperation may be a better strategy than competition. While Future Group has had exploratory talks with Flipkart and Myntra as well recently, its negotiations with Amazon are said to be at a more advanced stage.
"Both companies also explored the possibility where the entire back-end and online initiatives of Future Group's nearly three dozen own brands across apparel and electronics can be managed by the US online retail giant that could generate business worth Rs 3,000 crore," said a person aware of the discussions.
"The partnership can also create exclusive products or brands for India similar to how Amazon sells e-book reader Kindle globally," added the person. Amazon and Future Group didn't respond to email queries.
Bezos, one of the world's richest men with an estimated net worth of $30 billion, arrived in India on September 28. In July, his company announced it would invest $2 billion in the company's India operations that have exceeded gross merchandise sales of more than $1 billion within a year of the launch.
Amazon's main rivals in India are Bangalore-based Flipkart and Snapdeal, the latter a Delhi-based company that counts eBay, Azim Premji and Ratan Tata as investors. Together, they have sold goods worth more than $4 billion, with Flipkart alone estimated to have crossed $2 billion. And the battle could only intensify --according to a report by consulting firm Technopak, the $2.3 billion e-tailing market is expected to swell to $32 billion by 2020 and account for 3% of total Indian retail.
An alliance between Amazon and Future Group could be mutually beneficial, said Ruchi Sally, director at boutique retail consultancy Elargir Solutions. "Future Group will get to leverage Amazon's online strength especially for their own brands that aren't mostly sold outside their department stores and few standalone outlets," Sally said.
"And Amazon will get to experience one of India's biggest retailers and this learning can come handy while competing with homegrown rival Flipkart that has an advantage of knowing Indian brands more closely." The only challenge will be how to differentiate between pricing or positioning of Future Group's brands in their own stores and on Amazon's website, Sally said.
Amazon can also make use of Biyani's logistics arm, Future Supply Chain, that provides services to large corporates in the food, beverages and apparel space by leveraging readily available distribution centres, warehouses and fleet management across the country.
Biyani, founder of India's largest retail group, has been quite vocal on whether deep discounting strategy by online marketplace players makes business sense, suggesting that offering cheaper prices wouldn't help them in the long run.
"You must check if gross margins of such companies are positive or not. There is hope of survival for them when their gross margins are positive," Biyani had told last week.
Future Group operates more than 16 million square feet of retail space in India.
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