In a significant move, Amazon has announced that it will be shutting down its food delivery business in India by the end of this year. The e-commerce giant had entered the Indian market less than three years ago and had been investing heavily in various verticals to expand its presence.
Background on Amazon Food
Amazon launched its food delivery service, called Amazon Food, in May 2020 in parts of Bengaluru. The company initially tied up with a limited number of restaurants but later expanded its services across the city. However, despite its efforts, Amazon never heavily promoted or marketed the platform, which may have contributed to its failure.
Why Shut Down Now?
Amazon stated that it does not take decisions like this lightly and is discontinuing its food delivery business in a phased manner to ensure that current customers and partners are taken care of. The company also mentioned that it will be supporting affected employees during the transition period.
Market Competition
The Indian food delivery market is estimated to be worth $20 billion in three years, with Zomato maintaining a small lead against rival Swiggy, backed by SoftBank, Prosus Ventures, and Invesco. Amazon’s decision to shut down its food delivery business may indicate that it has been struggling to compete with these established players.
Amazon’s Broader Restructuring in India
This announcement is part of Amazon’s broader restructuring efforts in India. Earlier this week, the company announced that it will be shutting down its edtech service Academy in the country next year. This move comes as Amazon continues to focus on providing a seamless online shopping experience for its growing customer base.
India a Key Market for Amazon
Despite this setback, Amazon remains committed to its Indian market, which is considered key to the company’s global expansion plans. The e-commerce giant has deployed over $6.5 billion in its local business in India and continues to invest heavily in various verticals to expand its presence.
Challenges Faced by Amazon
Amazon has been facing challenges in making inroads into smaller Indian cities and towns, according to a recent report by Sanford C. Bernstein. The company’s 2021 gross merchandise value in the country stood between $18 billion to $20 billion, lagging behind Walmart’s Flipkart at $23 billion.
Conclusion
Amazon’s decision to shut down its food delivery business in India marks a significant setback for the e-commerce giant in the Indian market. However, with its continued focus on expanding its presence and providing a seamless online shopping experience, Amazon remains committed to its Indian market. As the company continues to navigate the complexities of the Indian market, it will be interesting to see how it adapts and evolves to meet the changing needs of its customers.
Timeline
- May 2020: Amazon launches its food delivery service, called Amazon Food, in parts of Bengaluru.
- Later expanded services across the city.
- December 29, 2023: Amazon announces that it will be shutting down its food delivery business in India by the end of this year.
Related Articles
