Amazon dials back some B2B distribution in India

Amazon’s wholesale marketplace by all accounts is flourishing worldwide except for one key fast-growing market: India.

Published reports and a short statement from Amazon confirm the world’s biggest online retailer is closing its distribution center for wholesale grocers selling to small- and medium-sized retailers in some parts of India.

Amazon is halting Amazon Distribution, its B2B ecommerce site currently used by small neighborhood stores in Bengaluru, Mysore and Hubli.

“We don’t take these decisions lightly,” Amazon said in a statement. “We are discontinuing this program in a phased manner to take care of current customers and partners.” The three cities are in India’s southwestern region.

Amazon did not say when it would be pulling the plug on its wholesale grocery ecommerce distribution business in the three cities. It also did not say if the closures will impact more parts of the country going forward.

But the move is a step back for Amazon in India, one of the world’s fastest-growing B2B and B2C ecommerce markets. B2B ecommerce in India is currently an online market generating annual sales of about $5.6 billion. It will grow 80% to an estimated $10.1 billion in 2022, Statistia.com projects. The B2C ecommerce market in India is expected to grow 22% and reach $105.0 billion in 2022, according to ResearchandMarkets.com.

Amazon reportedly has spent nearly $9 billion in developing its ecommerce business in India, according to a published report from TechCrunch.com. But “Amazon is lagging its chief rival Flipkart in India on several key metrics and struggling to make inroads in smaller Indian cities and towns, according to a scathing report by investment firm Sanford C. Bernstein,” according to TechCrunch.com.