- Amazon enters the highly competitive food delivery market dominated by established players Swiggy and Zomato with launching their pilot services in Bengaluru.
With its already huge investments in a two-hour supply chain for Amazon Now portfolio, the US e-commerce retailer is now piloting its much-anticipated project of delivering food on-demand to select locations in Bengaluru. It comes at a time when Swiggy and Zomato cut discounts and tightened cost structures and, as a ride-healing venture, Uber retired entirely from India’s food supply market, selling UberEats India to Zomato.
Amazon’s move to enter food delivery is part of a larger plan to build a comprehensive product portfolio–from food and grocery to electronics and home products–for its top customers who have made use of its paid subscription service Amazon Prime.
“Amazon doesn’t mind the timing. You can be last in a market, and still win, “a consumer internet space investor said.
Food delivery is getting maximum traction of any consumer technology product in the country, followed by grocery, fast-moving consumer goods, and general e-commerce, the investor said.
According to the executive and restaurant partners, Amazon’s food delivery network is now available only to its employees and trials are underway through five high-density pin codes in the city–HSR, Bellandur, Haralur, Marathahalli, and Whitefield.
Executives at two unidentified restaurants reported that Prione Business Services, a joint venture between Infosys co-founder NR Narayana Murthy’s Catamaran Ventures and Amazon India, has signed contracts with brands to be listed on Amazon, offering commissions of 10-15 percent.
The fees are approximately half of what Swiggy and Zomato charge their affiliate restaurants.
“The launch (of the food delivery company for Amazon) is planned for March, and the service will be available on the Prime Now app,” said one person aware of the plans. According to reports, the project is led by Raghu Lakkapragada, managing director-product at Amazon.
The etailer will eventually look to launch exclusive brands that will partner with restaurants for specialized cuisine including Korean and Japanese, he said.
“We claim that we innovate on behalf of our clients. We are constantly evaluating new areas and ways to communicate with and support our customers as part of this commitment, “an Amazon spokesperson said. In order to tackle Swiggy and Zomato head-on, Amazon will have to make significant investments in logistics, the restaurant ecosystem and technology, and marketing to scale up its food delivery business, said experts and investors in the space.
Last week Swiggy raised $113 million, led by an established investor, South African internet giant Naspers. That came within a few weeks of Zomato receiving around $350 million for UberEats India.