Amazon will shut down its food delivery business in India by the end of the year, the retailer said Friday, retreating from a $20 billion vertical it entered less than three years ago.
The retailer will shut down the food delivery business, called Amazon Food, on December 29 in India. It launched Food in India in May 2020 in parts of Bengaluru. The company later expanded the service across the city, tying up with additional restaurants, but it never heavily promoted or marketed the platform.
“Customers have been telling us for some time that they would like to order prepared meals on Amazon in addition to shopping for all other essentials. This is particularly relevant in present times as they stay home safe,” the company said at the time of Food launch.
India's food delivery market is estimated to be worth $20 billion in three years, according to Sanford C. Bernstein. Zomato, publicly listed, currently maintains a small lead in the market against rival Swiggy, backed by SoftBank, Prosus Ventures and Invesco.
Amazon said Friday: “We don’t take these decisions lightly. We are discontinuing these programs in a phased manner to take care of current customers and partners and we are supporting our affected employees during this transition. Amazon remains focused on providing our growing customer base the best online shopping experience with the largest 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 shutting down its edtech service Academy in the country next year.
India is a key overseas market for Amazon, which has deployed over $6.5 billion in its local business in the country. But the company is lagging Walmart's Flipkart and struggling to make inroads in smaller Indian cities and towns, according to a recent report by Sanford C. Bernstein.
Amazon's 2021 gross merchandise value in the country stood between $18 billion to $20 billion, lagging Flipkart’s $23 billion, the analysts said in a report to clients.