Amazon to Close Food Distribution Company in India

Amazon, the famous e-commerce platform, announced this week that it will shut down its Indian food distribution operations by the end of the year and withdraw from the $20 billion marketplace it entered less than three years ago. The company will close its food delivery business in India, Amazon Food, on December 29. In May 2020, it launched Food in India, which began serving parts of Bengaluru. The company later expanded the service to the entire city by connecting with additional restaurants. But it never heavily promoted or marketed the platform.

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Amazon Explained the Reason for Withdrawal

In the growth coinciding with the pandemic period, the company said that ready-to-eat food orders increased in the regions it serves, and mentioned that the value of the food market in India will increase. According to Sanford C. Bernstein, India's food delivery market is estimated to be worth $20 billion in three years. Publicly-traded Zomato currently holds a small share of the market against rival Swiggy, backed by SoftBank, Prosus Ventures and Invesco. Amazon said in a statement during the week;

The announcement appears to be part of Amazon's broader restructuring in India. Earlier this week, it announced that it will close its edtech service academy in the country next year. India is described as an important marketplace for Amazon, which distributes over $6.5 billion in its local business in the country. But the company is lagging behind Walmart's Flipkart and struggling to make inroads in India's smaller cities and towns, according to a recent report by Sanford C. Bernstein.