Amazon may lose India if wholesale business shuts down

From layoffs to business closures , Amazon's expansion in India has not been smooth. Of course, Amazon is not the only company that has been hit hard, but for the tech e-commerce giant, its situation in India has become increasingly worse.

This not only refers to Amazon India's slowing revenue growth and questionable profitability , but also the strict market regulations and fierce competitive environment it faces .

Perhaps Amazon should have realized this day would come as early as January 2020, when Indian Union Minister Piyush Goyal pooh-poohed Jeff Bezos’s comments about investing in India. Although Piyush Goyal later said he had no such intention, Bezos’s trip to India was indeed fruitless.

Now that 2022 is coming to an end, Amazon suddenly finds itself treading on thin ice in the Indian market.

In November this year , Amazon announced the end of its wholesale business in India, which means that Amazon has given up competing with Flipkart Wholesale and Reliance's JioMart.

According to Redseer, India's online wholesale market is expected to grow to $90 billion to $100 billion by 2030. Amazon's withdrawal has raised questions about its ability to operate in India.

Recently, several employees of Amazon India reported that they were asked to resign by the company. The Indian Ministry of Labor asked Amazon about this matter, but the e-commerce giant denied this.

In addition to regulatory issues, Amazon is also facing fierce competition. It is understood that many of its areas in India have been preempted by Reliance, and Amazon has also lost several acquisitions.

In addition, the global economic recession has also dealt a severe blow to Amazon's confidence, and whether to stick with its loss-making business in India has become a top priority.

Amazon has been in India for nearly a decade, but despite investing more than $6.5 billion, its profitability remains questionable. It also lags behind Flipkart in terms of market share. The niche market of platforms such as Meesho, Tata Neu and JioMart makes it harder to compete.

In September, brokerage firm Bernstein noted: “New platforms like SoftBank-backed Meesho ($5 billion GMV) are capturing faster-growing Tier 2 and 3 cities.”

Meesho is said to have beaten Amazon in sales during the 2022 festive season, while Flipkart topped the list in a report by Redseer, which Amazon has disputed.

But no matter what the data shows, there is no doubt that Amazon has reached a point of no return in the Indian market.

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