Amazon is closing 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 more than $7 billion over the past decade.
The American e-commerce giant on Monday said it is discontinuing Amazon Distribution, its wholesale e-commerce site available in small neighborhood stores in Bengaluru, Mysore and Hubli.
“We do not make these decisions lightly. We are discontinuing this program in a phased manner to take care of our current customers and partners,” a company spokesperson said in a statement.
Amazon Distribution was designed to help India’s kiranas, neighborhood stores, pharmacies and department stores secure stock from the e-commerce giant.
“We offer a wide range of products at competitive prices and the convenience of next day delivery to your door. 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 through the various payment options available, receive the VAT invoice for your order and convenient and reliable deliveries to your door the next day”, describes the company on the Amazon Distribution website.
Amazon did not say why it was closing the wholesale distribution offering, but the move follows the company closing two other businesses — grocery delivery and online learning platform Academy — in the country as part of a global restructuring of its business.
The series of announcements, however, has led many to speculate that Amazon, which has plowed more than $6.5 billion into its local business in the country, is slowly scaling back its operations in the South Asian market. The firm saw several of its senior executives leave in the last months.
India is a key overseas market for Amazon. But the company is lagging behind 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 was between $18 billion and $20 billion, trailing Flipkart’s $23 billion, analysts said in a report to clients.
Amazon also faces competition from billionaire Mukesh Ambani’s Reliance Retail, which launched grocery shopping on WhatsApp, and SoftBank-backed social commerce startups Meesho and DealShare-backed Tiger Global. So far, it has offered “a weaker proposition in the ‘new’ trade” in the country, the report added.
At stake is one of the last high-growth markets in the world. E-commerce spending in India, the world’s second-largest internet market, is expected to double to more than $130 billion by 2025. Amazon has sought to increase its presence in India through stakes in local firms and also aggressively explored partnerships with neighborhood stores.
The company tried to acquire Future Retail, India’s second largest retail chain, but was duped by the Ambani firm. (Amazon has accused its estranged Indian partner and Reliance of newspaper ad fraud.)
Amazon did not immediately say whether it plans to close any other lines of business in the country.