Amazon Wholesale
Distribution: The
Shutdown
Presented by: Ankit Kumar Singhaniya
Brief Amazon operates its wholesale business in
Mysore, Bengaluru and Hubli. The goal of
Amazon Distribution was to make it easier
for kiranas, or Indian neighbourhood shops,
pharmacies, and department stores to
obtain merchandise from the online retailer.
The American e-commerce giant said on Nov
21, 2022 that it is discontinuing Amazon
Distribution, its wholesale e-commerce
website, effectively from Dec 29, 2022. The
exact reason has not been given, but
research indicates that this is done in order
to cut costs amid a global restructuring of
its business.
Numbers for the
years 5000
Revenue Loss
The wholesale business saw a 6.6%
4000
rise in revenue in FY 21 (Rs. 3628
crores) and 26.4% in FY 22 (Rs. 4605
3000
crocres) compared to FY 20 (Rs.
3388 crores). The net loss kept
2000
increasing from Rs. 133 crores in FY
20 to Rs. 161 crores in FY 21 and Rs.
1000
480 crores in FY 22.
0
FY 20 FY 21 FY 22
Competitor
Amazon Reliance Retail
Analysis 6000
5000
Reliance Retail, owned by Mukesh Ambani
4000
has been showing much better results in
India compared to Amazon. While the 3000
latter has been facing losses in crores of
rupees for the last 3 fiscal years, the 2000
former has made massive profits and is
only looking to expand in this field. 1000
Reliance has recently won a face-off with
Amazon when it took over Future Group's 0
stores that Amazon was seeking to buy
-1000
huge shares of. FY 20 FY 21 FY 22
Self Analysis
Amazon likely wanted to concentrate on its core
businesses rather than be sidetracked or incur
unnecessary capital burn in the Indian market. Following
the loss in taking over Future Group, it probably felt that
continuing the wholesale business in a market where a
competitor is already so well funded and prevalent
would be a waste of resources, especially in these times
when the global market is falling down. Additionally,
given that Reliance can buy huge amount of goods for its
stores gives it an edge over Amazon, as it is only a
platform and is not allowed to act as a merchant. Thus, it
creates a sourcing advantage for Reliance.
