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Amazon to shut down distribution unit in India

Amazon.com’s India unit has shuttered its third business in a week, as the e-commerce giant continues to cut costs in a country that it has found tough to crack.

Amazon said the shuttering comes as a part of its annual operating planning review, the same process that also led to the discontinuation of Amazon Academy on Nov. 24 and Amazon Food on Nov. 25.

“We have made the decision to discontinue Amazon Distribution, our wholesale e-commerce website for small neighbourhood stores around Bengaluru, Mysore, and Hubli. We don’t take these decisions lightly,” an Amazon spokesperson told BQ Prime. “We are discontinuing this programme in a phased manner to take care of current customers and partners, and we are supporting our affected employees during this transition.”

As with previous statements, the company reiterated that it remains “committed to India and will continue to invest” across areas such as grocery, consumer electronics, and its B2B offerings.

Amazon Distribution operated in three cities in Karnataka and was a platform meant for the wholesale purchasing needs of small neighbourhood stores.

It will continue to run Amazon Business, which is a B2B marketplace where third-party sellers sell only to business customers who are mainly small businesses and enterprises.

Amazon India, helmed by Amit Agarwal, has had a hard time attaining profitability in its nearly a decade of operations.

Though India is one of Amazon’s fastest-growing markets, the Jeff Bezos-founded company “faces immense competitive pressure in fast-growing categories, a weaker value proposition in “new” commerce, limited traction in tier-II, III cities, and an unfavourable regulatory environment for outsiders”, Bernstein said in its August report.

It further added that Amazon’s growth in India “has come at a high cost of over $6.5 billion invested to-date, while profitability remains elusive”. BQ Prime

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