* Reliance was previously in talks with Alibaba -source
* An online partner could strengthen Reliance's retail business
* Reliance-Amazon partnership could be a win-win for both (Adds details, analyst comment)
BENGALURU/MUMBAI, Aug 1 (Reuters) - Amazon.com Inc is in exploratory talks with Reliance Industries Ltd's retail unit to buy an up to 26% stake in India's biggest brick-and-mortar retailer, the Economic Times (ET) reported on Thursday.
The conglomerate, controlled by India's richest man Mukesh Ambani, was previously in talks with China's Alibaba to sell a stake in Reliance Retail, but a deal could not be sealed due to differences in valuation, a person familiar with the matter told Reuters.
Having an online partner would help strengthen Reliance's retail business, the person added, declining to be identified as the matter was private.
The Amazon-Reliance talks may not lead to a deal, according to the ET report. Reuters could not independently verify the talks.
Amazon declined to comment, while Reliance said it will make any disclosures to stock exchanges as and when necessary.
"As a policy, we do not comment on media speculation and rumours," Reliance said in a statement. "Our company evaluates various opportunities on an ongoing basis."
A partnership between Reliance and Amazon could be a win-win for both companies.
Reliance could potentially leverage Amazon's global experience in technology, supply chain and logistics as it aims to connect grocery stores across the country digitally through its Jio telecoms network - the biggest in India by subscribers.
Amazon's massive online presence could also help bolster Reliance's consumer and private labels business, according to retail consultants. Reliance Retail's revenue stood at 381.96 billion rupees ($5.53 billion) for the June quarter.
For Amazon, picking up a stake in a Reliance unit could mean getting access to the Jio telecoms platform and its vast retail footprint of more than 10,600 stores across India. It might also add more firepower to their lobbying efforts, as Reliance and the Ambani family are viewed as being well connected politically in India.
"There could be synergies which are beyond retail," said Arvind Singhal, chairman of retail consultant Technopak Advisors. "Whenever there is any kind of policy intervention needed, to be a partner with Reliance certainly will be a big asset."
Seattle-based Amazon has been engaged in a pitched battle with Walmart's Flipkart for a bigger share of India's fast-growing e-commerce market, which Deloitte expects to more than treble to $84 billion between 2017 and 2021.
Both U.S. giants have loyalty programs and credit card offerings to attract more Indian customers in what is one of their most important growth markets.
Amazon is planning a foray into the burgeoning online food delivery business in India this year, Reuters reported earlier this week.
Reliance Industries' shares were down 1.1% around mid-day trading in Mumbai on Thursday, in line with a decline in the benchmark Nifty index. ($1 = 69.0570 Indian rupees) (Reporting by Nivedita Bhattacharjee and Sankalp Phartiyal; additional reporting by Derek Francis; Editing by Rashmi Aich)