Amazon India shutters B2B distribution arm, third business closure in a week

Amazon (Image: AP)

Amazon has shuttered its third business in India in a week, with the company now closing down its B2B distribution business Amazon Distribution. This comes after the company announced it was closing down edtech arm of Amazon Academy and the food delivery service Amazon Food.

Amazon Distribution was to supply goods such as groceries and stationery to local Kirana stores, and was operational in three cities in Karnataka — Bengaluru, Mysuru, and Hubballi.

An Amazon spokesperson said Amazon Distribution was being shut down following an annual operating planning review process.

“As part of our annual operating planning review process, we have made the decision to discontinue Amazon Distribution, our wholesale e-commerce website for small neighborhood stores around Bengaluru, Mysore & Hubli,” the spokesperson said.

As per the statement, the program will be discontinued in a phased manner “to take care of current customers and partners and we are supporting our affected employees during this transition”.

The statement said the company continually evaluates the progress and potential of products and services to deliver customer value and makes adjustments based on those assessments.

Amazon said that it remains committed to the Indian market and will continue to invest across grocery, smartphones and consumer electronics, fashion & beauty, as well as B2B offerings such as Amazon Business. Amazon Business is a B2B marketplace where third-party sellers sell only to business customers, which continues to be operational.

It announced the closure of the edtech arm on November 24, and the food delivery arm on November 25.

Amazon Food, which started in May 2020, will cease to exist from December 29, per a communication sent to restaurant partners.

Amazon’s decision to shutter the three businesses comes as profitability continues to elude the Indian business, despite an investment of $6.5 billion, as per a Bernstein report. It added that regulations do not allow a foreign entity like Amazon to run on an inventory-led model.

The company also faces immense competitive pressure in fast-growing categories, a weaker value proposition in 'new' commerce such as quick commerce, limited traction in tier 2 and 3 cities, and an unfavorable regulatory environment for outsiders, the Bernstein report had said in August.

Amazon's moves also come at a time it has announced layoffs and has offered voluntary retirement to Indian employees. Globally, reports have pegged the number of expected job cuts at the company at 10,000.

A letter from CEO Andy Jassy to employees said that the company's annual planning process extends into 2023, which meant there will be more job cuts as adjustments are made. " Those decisions will be shared with impacted employees and organizations early in 2023," his letter read.

In India, an employee union, the Nascent Information Technology Employees Senate, has complained against Amazon alleging that employees are being forced to quit the company, following which the company was summoned by the Labour Ministry.