After Edtech Vertical, Amazon To Shut Down Food Delivery Business In India

In what appears to be Amazon’s bid to shutter loss-making entities, it has now emerged that the ecommerce major now reportedly plans to wind up its food delivery business by the end of the year. 

In a communication sent by the US-based company to its restaurant partners, Amazon said that it plans to discontinue Amazon Foods from Dec 29, 2022. 

“After a careful evaluation, we have decided to discontinue Amazon Food from Dec 29, 2022. 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,” Amazon told restaurants listed on the platform. 

It is pertinent to note that the food delivery vertical was operational only on a pilot basis in Bengaluru city. 

The service will be discontinued in a phased manner and the partner restaurants will have access to all Amazon tools and reports till January 31, 2023, said Moneycontrol citing the communication. 

The firm will also provide support to the listed partners till March 31 for any compliance-related issues. Additionally, Amazon is also said to have told the restaurants that it will meet all its payments and contractual obligations before winding up operations. 

Under Stress?

This is the second such development that has taken place over the course of the week. In November, the ecommerce giant said that it was shutting down its edtech vertical, Amazon Academy.

Just like Amazon Food, the US-based player has pointed to the scaling down of operations in pursuing organisational restructuring. 

This also comes at a time when the company is under enormous pressure both globally and in India. Earlier this month, the ecommerce giant announced mass layoffs, and has so far fired around 10,000 employees in the exercise. 

Back home, its flagship ecommerce vertical has failed to take off spectacularly as it still remains a loss making entity. While its marketplace firm Amazon Seller Services reported a loss of INR 3,649.2 Cr in FY22, its payment and financial services distribution arm Amazon Pay India saw its losses surge to INR 1,740.8 Cr during the same period. 

On similar lines, its logistics vertical Amazon Transportation also continued in red as loss jumped more than 38% to INR 95 Cr in FY22.

In the eye of stiff competition from homegrown players such as Flipkart, Reliance JioMart, Tata Neu and Meesho, purported investments of nearly $6.5 Bn over the years have still failed to push the company towards profitability. 

It has also been bogged down by regulatory matters in the country. Earlier this week, Inc42 reported that Amazon India employees were being told to resign voluntarily, with the process likely expected to last multiple weeks. 

This came close on the heels of the Ministry of Labour summoning Amazon India executives on the complaint filed by employee union Nascent Information Technology Employees Senate’s (NITES) seeking government’s intervention in the layoffs. 

In a meeting with Ministry officials, the ecommerce major said that it has not yet fired a single employee in the country. 

Amazon has also been under scrutiny in India from a slew of regulatory bodies ranging from the Competition Commission of India’s (CCI) scanner to NCLAT. It is also locked in a bitter battle with oil-to-telecom conglomerate Reliance for the reigns of Future Retail. 

What happens next is anybody’s guess but the winding down of operations in India stands in stark contrast with Amazon’s director of investor relations at Amazon Dave Fildes’ comments in July that the tech giant will continue to invest in emerging markets like India.