The Indian food delivery market now has a new entrant who is looking to shake things up and break the duopoly of Swiggy and Zomato in the hyperlocal food delivery market. Welcome, Amazon!
The food delivery market has been under the spotlight for a while now. Zomato recently acquired UberEats, thereby intensifying competition in the space with Swiggy.
According to recent reports, Amazon is now gearing up to enter the market in India and is planning to pilot in some urban areas in Bangalore.
Amazon is planning to provide the offering as a part of Amazon Fresh or Prime Now. The platform will be open only to its employees during the trial period and the food delivery option will be available in the Amazon app. After testing waters in Bangalore, Amazon’s food delivery service is expected to be launched in other parts of India as well.
India’s food delivery market is now picking up pace and offers lucrative growth opportunities. At least 61% of restaurants in Delhi, Pune, Hyderabad, Bangalore, and Mumbai offer delivery options, and more than 60% of restaurants have partnered with multiple online platforms to facilitate home delivery.
The E-commerce giant has been planning this venture for months and was working on partnering with restaurants in Bangalore with attractive commission rates. While Amazon’s entry into the food delivery market poses a threat to other platforms that charge restaurants a commission between 10 to 30 percent per order, it opens up more options for the ever-demanding urban customers.
World over, Amazon has been experimenting with new offerings. Amazon Pantry, where customers can order anything from bread, jam, to tissues to even a box of fruits, was recently started in the US. Amazon Prime has more users than ever across the globe.
This move into India’s hotly contested food delivery space is being viewed as a part of an umbrella plan to build a product portfolio that will cover everything from food, electronics, and grocery, among others, and enable its Prime members to get the best of the products, all on one platform. To put it in business terms, this will ensure that their Prime members become repeat customers and will never have to leave Amazon for any high-value or daily need products.
India’s homegrown startups Swiggy and Zomato are not far behind either. Swiggy and Zomato are heavily investing in Cloud kitchens and coming up with new offerings like Swiggy Go, an instant package pick-up and drop service.
However, in its conception stage, many Bangalore-based restaurateurs had concerns regarding Amazon’s delivery terms and conditions. Despite the lower take rate, Amazon’s platform does not cover the cost of delivery, which is an added cost for restaurant owners, Inc24 reported in September 2019. Some restaurateurs were also not convinced by Amazon’s user dashboard for tracking order histories.
In order to cut through the bar that Swiggy and Zomato have already set in the food delivery space, Amazon will have to step up its delivery processes and offer interactive dashboards and features like real-time order tracking. Fine logistics will be the true differentiator in the food delivery game, and it will be interesting to see how Amazon’s food delivery service unfolds.
Locus offers end-to-end logistics optimization solutions to businesses in the hyperlocal delivery sector.