Amazon business hit most in India over ban on delivery of non-essential goods

BENGALURU: E-commerce giant Amazon said that among all its global operations, its businesses in India have been the most severely impacted. There has been a drastic cut in Amazon’s offerings in India, where the e-tailer is currently selling only groceries, due to the government advisory prohibiting online marketplaces from selling non-essential goods.

“I think the biggest impact internationally has been in India where, of course, similar to all companies in the country, we are now only delivering essential goods such as grocery.

"So that has cut back a lot on our offerings and we will further expand when the Indian government announces that we are allowed to resume operations. Hence, we are in a bit of a holding pattern except for grocery in India,” Brian T Olsavsky, senior vice-president and chief financial officer, Amazon, told investors during an earnings call.

According to Forrester Research, online retail sales in India stood at $35 billion in 2019, with non-essential categories including consumer electronics, fashion, smartphones and large appliances comprising a chunk of the sales.

The share of groceries in the overall online retail in India during 2019 stood at just $2 billion.

With the government permitting the brick-and-mortar stores to sell non-essential goods in selected areas, sources said that stakeholders in India’s e-commerce industry have approached the authorities seeking permission for sale of goods other than groceries.

Meanwhile, Amazon.com Inc posted 29 per cent drop in profits during the first quarter of 2020 on account of increased costs to fulfill the surging consumer demand.

The Seattle-based e-tailer also plans to spend at least $4 billion in Q2 in order to overhaul its operations in response to the Covid-19 pandemic.

This also includes hiring 1,75,000 people globally. However, sources said that Amazon is not currently hiring in India in any department. The e-tailer also said it is expecting its first quarterly loss in Q2FY21 on account of expenses related to the pandemic.

Non-essential category sold for $35bn last year

According to Forrester Research, online retail sales in India stood at $35 billion in 2019, with non-essential categories including consumer electronics, fashion and smartphones comprising a chunk of the sales.