Amazon to shut down food-delivery business in India

Amazon will cease food delivery operations in India by the end of the year, the company announced on Friday, withdrawing from a vertical it entered less than three years ago.

Amazon Meal, the company’s food delivery service, will cease operations on December 29 in India. In May of 2020, the company debuted Food in India in sections of Bengaluru. Later, the company expanded the service around the city by partnering with new restaurants, but it never pushed or marketed the platform extensively.

Customers have indicated for some time that they would like to get ready-to-eat meals on Amazon in addition to purchasing all other necessities. At the time of Food’s introduction, the business stated, “This is especially pertinent in light of the fact that they stay home safe.”

It stated on Friday, “We take these judgments seriously. We are phasing down these initiatives to accommodate current customers and partners, and we are providing assistance to affected staff during this transition. Amazon remains committed to offering our expanding customer base with the best online shopping experience, widest product selection, and greatest value.”

The announcement is a component of the company’s extensive restructuring in India. This Monday, Amazon stated that it will discontinue its edtech service Academy in the country the next year.

India is an important international market for Amazon, which has invested over $6.5 billion in the country’s local operations. According to a recent analysis by the investment firm Sanford C. Bernstein, the company is lagging behind Walmart’s Flipkart in the country and is trying to penetrate smaller Indian cities.

The analysts stated in a report to clients that Amazon’s 2021 gross merchandise value in the country was between $18 billion and $20 billion, trailing Flipkart’s $23 billion.

Reuters reported last week that an uncertain macroeconomic environment is causing the e-commerce behemoth to reevaluate its global staff, with the business planning to let off some 10,000 corporate and technical employees.

Bernstein produced a report critical of Amazon India in September, stating that the company’s performance in the nation was “mixed,” with continuous losses despite $6.5 billion in investments.

While Amazon India’s marketplace, Amazon Seller Services, was able to reduce losses by nearly 23% to Rs 3,649 crore in FY22, losses at its payments and shipping operations grew.

According to the Bernstein analysis, Amazon has failed to significantly expand its business in high-margin categories like apparel and beauty and personal care, which are dominated by competitors Flipkart and Nykaa, respectively.

Diksha Dutt is a coder, blogger, and teacher. Apart from blogging, she is an avid reader and a travel enthusiast. Thanks for stopping by and getting to know her.