Amazon has bought a 5 per cent stake in Indian department store chain Shoppers Stop.

Local analysts herald the investment as a step towards the US e-commerce giant gaining a foothold in the brick-and-mortar sector to help build online-offline alliances and build its brand.

The purchase price is believed to be about Rs180 crore, (US$28 million).

Govind Shrinkhande, MD of Shoppers Stop, said the shareholding would be achieved with the issue of new shares to Amazon’s international investment house.  

“There is currently no proposal to increase their stake and Amazon as a retailer is not involved,” he said. “Amazon’s arm is a pure foreign investor which believes that our brick-and-mortar model is strong and has potential to grow.”

However, the deal comes just days after Shoppers Stop entered into a commercial arrangement to sell its products on Amazon India’s marketplace, including the establishment of an online flagship store.

Shrikhande said Amazon’s investment would help fund a planned 100 new stores over the next four years.