Amazon to Acquire Foodpanda to Strengthen Prime Now?

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The global e-commerce giant Amazon.com, Inc. (NASDAQ: AMZN) is coming up with a major food delivery business plan in India. Some close sources to the company reported that Amazon’s Prime Now might be a primary resource for its online food delivery plan.

Some media reports have suggested that Amazon might collaborate with Ola’s Foodpanda for its new food delivery venture. The reports also suggested that this collaboration talks could end up in Amazon complete acquiring Foodpanda.

Why is Amazon Acquiring Foodpanda?

The online food-delivery plans of Amazon can be a big threat to other online food services such as Swiggy and Zomato. What’s even more interesting is the transaction details of Amazon’s recently launched wallet, Amazon Pay on these services. A sizeable number of payment transactions on Swiggy and Zomato is through Amazon Pay, and that’s something Amazon might have taken a cue from. Now, Amazon aims to achieve similar success with its food delivery services.

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Just last month we reported about a possible deal between Amazon and Uber Eats for its food delivery incursion. Uber Eats is the food arm of the dominant app-based ride-hailing company Uber.

According to the Times of India, Prime Now (previously known as Amazon Now) will be used as a delivery platform for the new food delivery services. This is to fasten the frequency of deliveries on the platform.

As of now, Prime Now is currently serving the customers of its grocery delivery service. The delivery team, however, has some serious concerns about the business model and believes that the delivery fleet is not getting utilised to its capacity. Hence, adding food delivery to Prime Now will allow the company to have efficient utilisation of its delivery fleet for express deliveries.

The retail giant is still looking to touch heights with its grocery delivery services – Amazon Pantry. Other groceries delivery services like BigBasket and Grofers are much ahead in the race of instant grocery deliveries. While Grofers claims to fulfil as much as 1.5.-1.8 million orders per month, the figure swells to 3 million in case of BigBasket.

Amazon is looking forward to launching food delivery services sometime during next year. A fixed date has not been announced yet. The head of Prime Now and Director of Amazon India (category management) are, however, putting these talks in the forefront.

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The online food delivery market in India, however, is already very crowded with names like Swiggy and Zomato. It will be interesting to see how Amazon affects the market equations and handles the competition. The success of Amazon food delivery service is still elusive.

Amazon did quite well in FY Q2 2019, the total net sales increased an impressive 19.9% YoY, to $63.4 billion. The operating income of the company increased to $4.4 billion in the first quarter of 2019 as compared to $1.9 billion in 2018. While the net income of the company also increased to $2.6 billion in Q2 2019, from $2.5 billion in Q2 2018.

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