Amazon is shutting down its wholesale distribution business in India, the latest in a series of retreats for the retailer in the key overseas market where it has deployed over $7 billion in the past decade.
The American e-commerce giant said Monday that it is discontinuing Amazon Distribution, its wholesale e-commerce website available to small neighborhood stores in Bengaluru, Mysore and Hubli.
“We don’t take these decisions lightly. We are discontinuing this programme in a phased manner to take care of current customers and partners,” a company spokesperson said in a statement.
Amazon Distribution was designed to help kiranas, the neighborhood stores in India, pharmacies and department stores secure inventory from the e-commerce giant. The company didn’t say precisely when the service will be discontinued.
“We offer a wide range of products at competitive prices and the convenience of next day delivery at your door-step. As a member, you can purchase thousands of items for resale at any time of the day at competitive prices and in bulk quantities, pay via the various payment options available, get GST bill for your order, and convenient and reliable door-step deliveries the next day,” the company describes on Amazon Distribution website.
Amazon did not say why it was shutting down the wholesale distribution offering, but the move follows company shutting two other businesses — food delivery and online learning platform Academy — in the country amid a global restructuring of its business. Amazon is planning to cut about 10,000 jobs, according to media reports, and began eliminating roles in some divisions including devices and services earlier this month. The closure of aforementioned Indian businesses also involves elimination of some roles.
In a memo, Amazon chief executive Andy Jassy warned employees that the company will undertake more layoffs next year.
The series of announcements in India have nonetheless prompted many to speculate that Amazon, which has deployed over $6.5 billion in its local business in the country, is slowly scaling down its operations in the South Asian market. The firm has seen several of its senior executives depart in recent months.
Amazon plans to continue to focus on its core e-commerce offerings in India, according to a source familiar with the matter. Last week, Amazon launched its second AWS region in India and pledged to invest $4.4 billion in its cloud operations in the country by 2030.
India is a key overseas market for Amazon, but also one where it faces stiff competition from heavily-backed rivals. Amazon is lagging Walmart’s Flipkart and struggling to make inroads in smaller Indian cities and towns, according to a recent report by Sanford C. Bernstein. Amazon’s 2021 gross merchandise value in the country stood between $18 billion to $20 billion, lagging Flipkart’s $23 billion, the analysts said in a report to clients.
Amazon also faces competition from billionaire Mukesh Ambani’s Reliance Retail, India’s largest retail chain that is increasingly going online, and social commerce startups SoftBank-backed Meesho and Tiger Global-backed DealShare. Amazon has so far offered “a weaker proposition in ‘new’ commerce” in the country, Bernstein analysts said.
At stake is one of the world’s last great growth markets. The e-commerce spending in India, the world’s second largest internet market, is expected to double in size to over $130 billion by 2025.
Amazon has been attempting to increase its presence in India through stakes in local firms and has also aggressively explored partnerships with neighborhood stores.
It also attempted to acquire Future Retail, once India’s second largest retail chain, but was outwitted by Ambani’s firm. (Amazon accused the estranged Indian partner and Reliance of fraud in newspaper ads.)
Amazon did not immediately say if it plans to close any other business line in the country.