Amazon will close its food delivery business in India later this year, the retailer said on Friday, pulling back from the $20 billion vertical it was in. less than three years ago.
The retailer will close its Amazon Food delivery business on December 29 in India. It launched Food in India in May 2020 in parts of Bengaluru. The company later expanded the service citywide, linking up with more restaurants, but it never promoted or aggressively marketed the platform.
“Customers have been telling us for a while that they want to order prepared meals on Amazon in addition to shopping for all the other essentials. This is especially relevant in these times when they are safe at home,” the company said at the time of Food’s launch.
According to Sanford C. Bernstein, India’s food delivery market is estimated to be worth $20 billion in three years. Zomato, which is publicly listed, currently maintains a small market lead over rival Swiggy, which is backed by SoftBank, Prosus Ventures and Invesco.
“We do not take these decisions lightly,” Amazon said on Friday. We will be discontinuing these programs in stages to take care of our existing customers and partners, and we are supporting impacted employees during this transition. Amazon remains focused on providing our growing customer base with the best online shopping experience with the widest selection of products at great value and convenience.”
The announcement is part of Amazon’s broader restructuring in India. It announced earlier this week that it will be shut down its edtech service in the country next year.
India is an important overseas market for Amazon, the company has deployed more than 6.5 billion dollars in its local business in the country. But the company is lagging behind Walmart’s Flipkart and struggling to penetrate smaller Indian cities and towns, according to a recent report by Sanford C. Bernstein.
In a report to customers, Amazon’s 2021 total merchandise value in the country is between $18 billion and $20 billion, down from Flipkart’s $23 billion, analysts said in a report to clients.