Business Today has learned that IT and e-commerce giant Amazon has chosen to end its distribution services in India, after the end of its food delivery and education services.
The corporation will concentrate on its main business and reduce its involvement in other verticals. A source told Business Today, “This decision was made in response to the economic slump, and the corporation will now concentrate more on its core activities.”
Amazon Distribution employs approximately 50 individuals and mostly operates in Bengaluru, Hubli, and Mysore. The distribution unit obtains fast-moving consumer items from manufacturers and delivers them to retailers.
Business Today has contacted Amazon for comment on the situation. When the company replies, the copy will be updated.
Amazon India decided on Friday to discontinue its food delivery service, Amazon Food, as part of its annual operational planning review.
Last week, the digital giant also discontinued its ed-tech program, Amazon Academy. Amazon Academy was founded by the firm during the COVID-19 lockout, a time when ed-tech companies such as BYJU’s, Unacademy, and Vedantu experienced rapid growth.
Last week, the company was summoned by the Labour Ministry for a hearing about its Voluntary Separation Program, a plan that encouraged Indian employees to leave the company in exchange for monetary advantages.
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A Anjanappa, the Labour Ministry’s deputy chief commissioner, called Amazon’s senior public policy manager Smitha Sharma and the employee association NITES to a hearing.
During the hearing, the company asserted that all employee departures were voluntary and that no undue pressure was applied to induce employees to leave.
Representatives of the workforce were unable to attend the hearing and requested a postponement. According to information obtained by Business Today, the meeting will reconvene in two to three weeks.
Amazon to Shut Down its Food Delivery Business in India
Amazon is not alone in reducing expenses as a result of the global economic slowdown, which has forced even the largest technology companies to do so.
The ecommerce behemoth, which announced mass layoffs earlier this month, is now looking to shut down or significantly curtail operations of nonviable businesses.
Among them is its Indian food delivery business, which is reportedly on the chopping block, shortly after Amazon shut down its edtech service ‘Amazon Academy’ in India.
TechCrunch reports that the Seattle-based tech giant informed its Indian restaurant partners last week that it would be closing its food delivery business in the country.
Amazon Food, the company’s food delivery service in India, will be discontinued on December 29, less than three years after its launch in Bengaluru, India, with several restaurants.
According to a company spokesperson, the decision to discontinue the service was made as a result of an annual review of operational planning.
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“We take these judgments seriously. We are phasing out these program to accommodate our current customers and business partners. Moreover, we are providing assistance to affected employees during this transition.
Amazon remains committed to providing our expanding customer base with the best online shopping experience, the largest selection of products at the best prices, and the greatest level of convenience,” said the spokesperson.
As of December 29, restaurants will no longer receive customer orders via Amazon Food due to the discontinuation of the service.
Amazon added that it remains committed to India and will continue to invest in verticals including smartphones and electronic goods, fashion and lifestyle, and B2B solutions like Amazon Business.
Amazon also notified its restaurant partners in the communication that it expects them to “continue fulfilling” the orders they receive until then, in addition to meeting all payments and other contractual duties.
In addition, restaurants will have access to all Amazon tools and reports until January 31, 2023, and the e-commerce giant will provide compliance-related support until March 31, 2023.
Amazon has spent billions to boost its market share and establish its presence in the South-Asian market.
India remains one of Amazon’s primary markets. A new analysis by the trading firm Bernstein indicates that despite Amazon’s massive investments in the country – $6.5 billion over the previous eight years – the company has not been profitable in the country.
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Last year, its gross merchandise value (GMV) in the country was between $18 and $20 billion.
The Indian food delivery sector, which is projected to be worth $20 billion in three years, continues to be dominated by Swiggy and Zomato, and is yet another vertical in which Amazon has struggled to establish a major presence.
The tech giant continues to restructure its operations and shut down businesses, including Academy and Food, in response to a macroeconomic climate that requires companies to lay off thousands of employees in order to be profitable.