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Amazon is reworking its plans. The ecommerce giant has been hit by macroeconomic headwinds. They have come at a time when consumer spending is returning to pre-pandemic levels, and even lesser in some areas. Such changes are making the company cut its workforce, shelf promising projects, and wait for the worst to pass by.
Two weeks ago, the company followed suit with other tech giants as it swung the axe on talent. The global retailer decided to let go thousands of staff. At that point, it noted that the decision on who will be laid off will rest with respective department heads. But, one of the most affected divisions is its devices group - - the one that makes Alexa.
In India, the company is going beyond departments. It is pulling the plug on some of its promising projects. For instance, the ecommerce giant has said it is beating a retreat from food delivery, wholesale distribution service, and online learning businesses.
Food delivery is already crowded in the subcontinent as Swiggy and Zomato dominate the market to get food to consumers. Amazon’s online learning venture is dwarfed by large rival platforms that are gobbling up smaller firms. These two services were anyway not in Amazon’s sweet spot.
But letting the wholesale distribution service go is no minor decision. In fact, when the project was launched just few months before pandemic disrupted almost everything under the sun, it was seen as an important move.
In January 2020, at a conference in New Delhi, then Amazon CEO Jeff Bezos, and head of Amazon India, Amit Agarwal, said the retail giant will pump in a billion dollars to help the country’s small and medium-sized businesses. This was on top of $5.5 billion it invested earlier in the country.
Two years later, CEO Andy Jassy is moving the company’s investment into cloud services. A week ago, the company launched its second AWS region in the country and pledged to invest $4.4 billion by the end of this decade.
Amazon’s shift in investment and retreat from wholesale distribution comes at a time when India’s own open e-commerce network gathers pace. The Open Network for Digital Commerce (ONDC) was launched in April with an aim of building an alternative to dominate retail platform like Amazon. The network is designed to bring buyers, sellers, distributors and payment systems onto one single platform.
ONDC is promoted by Department for Promotion of Industry and Internal Trade (DPIIT). The initiative’s proponents believe that such a platform could democratise and combine the entire digital commerce for the convenience of customers and other stakeholders.
Under the guidance of the country’s trade promotion wing, the initiative is said to have completed testing the service in 85 towns across the country. Earlier in April, it was soft launched in Bengaluru for beta testing.
Nearly two dozen entrepreneurs, logistics partners, vendors, mom and pop stores are joining the network, and over 2,000 digital commerce transactions, mostly grocery and food, were carried out on the network, according to T. Koshy, Managing Director and CEO of ONDC.
At a high level, the country’s trade wing’s initiative will create as super-platform which will host sub-systems. It will attempt at bring disparate but inter-dependent units together. So, the timeline for a scalable open e-commerce network will take some time to forge links and put processes in place for a smoothly functioning marketplace. And when that happens, the system would require the service of a cloud. At that point, Amazon’s $4.4 billion investment in building a second AWS region in the country will start reaping a rich reward.
