It is reported that Amazon is giving the introductory fee as low as 6-7 percent which is very low as compared to the commission of 15-17 percent and the promise of high order volumes, following the way as Swiggy started.The commission is basically a service fee charged by the aggregator for providing food delivery order. The e-commerce giant is aggressively pitching in order to break the exclusive contracts signed by restaurants with food aggregators.
The etailer is set to launch its food delivery service in Bengaluru around Diwali. It will be launched in its two-hour grocery delivery app Amazon Prime Now, under the brand name ‘Amazon Restaurant’. The company plans to stay focused on the top metros as they will look to increase the premium customers and bulk up the Amazon Prime User base. Along with it, The company is also entering the delivery sector of medicines and beauty products soon.
Amazon and Catamaran Ventures’ local joint venture Prione Business Services has already started hiring sales and account managers as it nears the official launch date.
Amazon is also partnering with cloud kitchens such as Rebel Foods, FreshMenu, FoodPanda and Eat.Fit along with top restaurant chains such as Domino’s, McDonald’s, KFC and regional chains too.
In a cloud kitchen, operators prepare, package and deliver food without providing any dine-in facility to end-consumers.
Amazon’s decision to launch the food delivery came after extensive research of several models including investing, buying out, partnering with cloud kitchens, and other food aggregators.
Amazon was also in talks with UberEats for acquisition but the deal failed to materialize.
Amazon’s food delivery launch is likely to intensify the cash burn in the sector, investors pointed out. Rivals Swiggy and Zomato continue to burn close to $30-40 million each month on discounting, logistics and restaurant tie-ups, yet space has no clear market leader.
Swiggy records an estimate of 1.2 million orders a day across 300 cities while Zomato fulfills about 1 million daily orders across 500 cities
Amazon closed down its four-year-old Amazon Restaurants in the United States operated under Amazon Prime Now, while in Europe. it has invested in food delivery startup Deliveroo after shutting down own service.
With Amazon entering the food delivery space at such a rapid pace, it will be interesting to see how they will compete with the unicorns Swiggy and Zomato.