Amazon is reportedly planning to cut back its Amazon Fresh operations in India while expanding AmazonNow — its ultra-fast grocery delivery service — to 10 to 15 cities, according to a UBS report. The move signals a shift in Amazon’s strategy to focus on faster, smaller-format deliveries instead of running a larger, inventory-heavy grocery network.
This comes amid growing competition from other quick-commerce startups and e-grocery platforms, where speed and convenience are increasingly becoming critical for urban consumers.
What Is AmazonNow and Why the Shift?
AmazonNow offers quick grocery deliveries, often within 90 minutes, in select metro areas. Unlike Amazon Fresh, which operates larger fulfillment centers and stocks a wide range of products, AmazonNow focuses on high-demand essentials, enabling faster inventory turnover and reduced operational costs.
The UBS report suggests that Amazon sees more potential in scaling quick commerce across multiple cities rather than sustaining a broader Fresh presence, which can be costly and complex to manage.
Implications for Amazon’s Customers and Operations
For Customers
- Urban customers may experience faster deliveries for essentials like dairy, vegetables, snacks, and packaged foods.
- Availability of certain niche products offered under Amazon Fresh might reduce in cities where the service is scaled down.
For Amazon
- The company can reduce operational costs by consolidating Fresh warehouses and focusing on smaller, high-turnover inventories.
- Expanding AmazonNow allows Amazon to capture more of the growing quick-commerce market, which is seeing rising demand in Indian metros.
The Competitive Landscape
India’s grocery delivery market has become increasingly competitive, with players like Swiggy Instamart, Dunzo, Zepto, and others rapidly expanding their city presence. UBS notes that Amazon’s pivot is likely a response to consumer preference for speed and convenience, as well as the capital-intensive nature of traditional grocery operations.
Analysts believe this shift could allow Amazon to compete more effectively in fast-growing urban markets, while keeping operational complexity and costs under control.
What’s Next for Amazon in India
- Expansion of AmazonNow to 10–15 cities, bringing ultra-fast delivery to more consumers.
- Gradual scaling down or consolidation of Amazon Fresh operations in select regions.
- Potential introduction of smaller fulfillment centers or dark stores to support faster deliveries.
By focusing on AmazonNow, Amazon aims to capture market share in the high-demand, instant-delivery segment, a strategy that may better align with current urban shopping behaviors.
