While there is no direct reason why Amazon is shutting down its distribution business in India, evidence points to the growing competition in the country’s e-commerce sector may be squeezing out the retail giant.
American multinational retail giant, Amazon.com Inc (NASDAQ: AMZN) has announced its plans to exit the Indian market, marking its third attempt to close its offerings in the Southern Asian market. The plans to halt Amazon Distribution spells a number of curiosity amongst observers as the company did not give a specific reason why it has decided to close the business.
Amazon Distribution is very helpful to India’s Kiranas, the neighborhood stores in the country and the business offshoot has gained unique prominence in areas such as Bengaluru, Mysore, and Hubli.
“We don’t take these decisions lightly. We are discontinuing this programme in a phased manner to take care of current customers and partners,” a company spokesperson said in a statement.
The introduction of the distribution business in India came with so much ambition, and since its inception, the company has deployed over $7 billion to date. Amazon Distribution’s role also extends to department stores and pharmacies, all of whom source their inventories from the company.
“We offer a wide range of products at competitive prices and the convenience of next day delivery at your door-step. 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 via the various payment options available, get GST bill for your order, and convenient and reliable door-step deliveries the next day,” the company describes on Amazon Distribution website.
However, slowing growth in the company’s business riding on the broader strain on the global economy has forced Chief Executive Officer, Andy Jassy to start exploring cost-cutting measures while focusing on the most profitable ventures across the board.
Amazon investors are beginning to wrap their heads around the update with shares dropping 1.08% in the pre-market to $92.40.
Amazon Distribution and Growing Competition
While there is no direct reason why Amazon is shutting down its distribution business in India, evidence points to the growing competition in the country’s e-commerce sector may be squeezing out the retail giant.
Amazon tried to adopt the expansion strategy in which it will acquire or partner with a local player, however, its push in this regard has not been particularly successful. The company has continued to face tough competition from Walmart Inc’s (NYSE: WMT) Flipkart and the retail outfit of Mukesh Ambani’s Reliance Industries. Other smaller players include SoftBank-backed Meesho and Tiger Global-backed DealShare.
The exit of the distribution business from Amazon follows the closure of two other businesses including a Food delivery outfit and Academy, its learning platform serving India and other Asian countries. It is yet unknown whether Amazon plans additional business shutdowns in the nation, however, its current conservative approach towards its operation is bound to impact the more than 10,000 staffers it has on its payroll in the country.
Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.
Source: https://www.coinspeaker.com/amazon-distribution-business-india/