Amazon to shut down distribution unit in India, focus on core businesses

The move is a part of the e-commerce firm's strategy to focus on its core business and close-fledging units it has launched such as edtech and food delivery, sources say

Amazon India has decided to shut down ‘Amazon Distribution’, according to sources. This follows its recent decision to shut its food delivery and edtech offerings. 

The moves are part of the annual operating planning review process amid global macroeconomic uncertainty. The e-commerce giant is looking to focus on its core businesses, sources said.  

Amazon Distribution operates platform where sellers sell fast-moving consumer goods and apparel products from companies and distributes them among hundreds of kiranas and small neighbourhood stores. However, this unit only operated in three cities of Karnataka —Bengaluru, Mysuru and Hubbali. About 50 employees worked on the Amazon Distribution project. 

“The company is trying to find alternative roles for them inside the organisation,” said a source familiar with the matter.

An Amazon spokesperson confirmed the development. The spokesperson said as part of the company’s annual operating planning review process, the firm has made the decision to discontinue Amazon Distribution.

“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,” said the spokesperson.

The Amazon Distribution platform is separate from Amazon Business, the B2B marketplace on Amazon.in, which caters to the business procurement needs of institutions such as hospitals, manufacturers, universities, schools,  government bodies and offices. The ‘Amazon Distribution’ business is only 4 per cent in size when compared to the ‘Amazon Business’ platform, according to the sources.

Amazon India has also decided to shut down its food delivery business on December 29 this year. Amazon Food had onboarded about 3,000 restaurant partners including quick-service restaurant brands such as McDonald’s and Domino's Pizza. Around 25 people working on the project have all been absorbed by the company.

Amazon announced its entry into online food delivery in India in May 2020, at a time the country was still going through the lockdown to contain the Covid-19 pandemic. The service was available in Bengaluru and the company was learnt to be mulling and scaling it up to other cities. 

However, Amazon couldn’t compete with established local players including Swiggy and Zomato in the food delivery space. “It had to cut prices to be competitive in this market,” said a person. 

Sameer Khetarpal, who was the director for category management, Amazon India was also leading Amazon Food. In May this year, Jubilant FoodWorks appointed Sameer Khetarpal as CEO and managing director effective from September 5, this year.

Amazon also said on Thursday it will close its edtech offering in India from August 2023 and refund the full fees to those enrolled in the current academic batch. The firm launched Amazon Academy in January 2021 to cater to students preparing for the Joint Entrance Examination (JEE) to engineering colleges. But it couldn't compete with top edtech companies such as Byju’s, Unacademy, and Vedantu. About 25 employees were working on the project and they all have been absorbed by the company. The platform was offering its courses to about 150 students, according to the sources. Amol Gurwara, was the director, of education, at Amazon India. Gurwara now continues his role as Country Manager at Amazon, Kindle.

Amazon is shutting down the Distribution unit, food delivery and edtech offering at a time when the company is laying off employees as part of the annual operating planning review process. However, the company didn’t specify the number of jobs that would be cut in India. According to the sources, attempts would be made to absorb as many within the different business units of the company as possible. Amazon will cut jobs again worldwide in early 2023, said chief executive officer Andy Jassy in a memo to employees last week.

Following a complaint by the employee union Nascent Information Technology Employees Senate (NITES) on layoffs by Amazon in India, the Labour Ministry summoned an official of the e-commerce firm in Bengaluru on Wednesday. NITES has written a letter to the Labour Ministry alleging that it has received complaints from employees of Amazon that they are being forced to quit the company 'voluntarily'. It alleged that the company has sent a detailed Voluntary Separation Program (VSP) as well. 

Labour Ministry, addressed the letter to Amazon’s senior manager for public policy Smitha Sharma. Amazon representatives told government officials that the company is not sacking the employees, according to sources. As the firm is looking to cut costs, the VSP letter was sent as a mass email to the unit inside the company where engineers build tools to make the employee experience better. Amazon told the government officials that it is up to the employees to accept or reject the VSP offer, but they won’t be laid off.