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Amazon to shut down food delivery service in India

Restaurant partners will have access to Amazon tools and reports till January 2023

November 26, 2022 / 07:27 AM IST

Amazon has told its restaurant partners in India that it has decided to discontinue its food delivery service, which it had started in May 2020, from December 29. This comes a day after the e-commerce major shut down its fledgling edtech arm in the country, even as the company plans to lay off thousands of employees globally.

“This decision means that you will no longer get orders from customers via Amazon Food after this date. You will continue to receive orders till then and we expect you to continue fulfilling those orders,” said a mail by Amazon to restaurant partners, a copy of which has been seen by Moneycontrol.

The company has told restaurants that is committed to meet all its payments and other contractual obligations. Restaurants will have access to all Amazon tools and reports till January 31, 2023. It will also provide support till Mar 31 for any compliance related issues.

"As part of our annual operating planning review process, we have made the decision to discontinue Amazon Food, our pilot food delivery business in Bengaluru," Amazon said regarding the shut down.

"We don’t take these decisions lightly. We are discontinuing these programs in a phased manner to take care of current customers and partners and we are supporting our affected employees during this transition," it added.

The company said that it remains committed to the India market and will continue to invest across grocery, smartphones and consumer electronics, fashion & beauty, as well as B2B offerings such as Amazon Business.

A recent report by brokerage firm Bernstein said that even after making investments of $6.5 billion in India through the last eight years, profitability remains elusive for the e-commerce major in the country with negative EBITDA margins of 5-10 percent.

The company also faces immense competitive pressure in fast-growing categories like smartphones and apparel, a weaker value proposition in 'new' business areas such as social commerce and quick commerce, limited traction in tier II and III cities, and an unfavourable regulatory environment for foreign retailers.

With the threat of a global slowdown looming, the Seattle-based company, which has been cutting costs in various areas of its business in the past few months, is undergoing an annual review process to figure out where it can save more money. Amazon CEO Andy Jassy said this year's review is "more difficult" due to the economic landscape and the company's rapid hiring in the last several years.

Other tech companies, many of which had gone on hiring binges in the past few years, have also been trimming their workforce amid concerns about an economic slowdown. Among others, Facebook parent Meta said last week it would lay off 11,000 people, about 13 percent of its workforce. And Elon Musk, the new Twitter CEO, has slashed the company's workforce in half this month.
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Deepsekhar Choudhury Deepsekhar covers tech and startups at Moneycontrol. Tweets at @deepsekharc
first published: Nov 25, 2022 08:26 pm