Amazon India Food Delivery Business: An Emerging Threat for Swiggy and Zomato?

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After establishing its prowess in one-day delivery and two-hour delivery, Amazon India is looking to expand into the domains of food delivery. According to the sources, Amazon is testing its food delivery service on the prime accounts of its few employees. The beta test is being carried out in the city of Bengaluru and deliveries are only available to a few locations.

The news comes from anonymous sources working in Amazon, who reported on Bloomberg.

In order to gather a preliminary evaluation of customer experience, the employees who can use the feature are required to submit feedback for each order.

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The sources also revealed that Amazon is currently in the process of making deals with restaurants and food chains across the country and might even strike a deal with Ola’s cloud kitchen service, Ola Foods.

Possible Contender for Zomato and Swiggy

The food delivery market in India is currently dominated by Zomato and Swiggy, both of which are services backed by Chinese multinationals. Zomato is partially aided by Alibaba Group, which mainly specializes in worldwide online retail and wholesale. Swiggy, on the other hand, is affiliated with Tencent Holdings, which specializes in technology.

The success of both services is partially attributable to their powerful affiliations which are well-versed with the process of deliveries and app development.

Up until recently, the Indian food delivery arena had 4 major players, with Uber Eats and Ola-owned Foodpanda competing for recognition along with Zomato and Swiggy. However, Foodpanda’s funding was decreased significantly in 2019, and Ola now offers cloud kitchen services. Similarly, Uber Eats was acquired in its entirety by Zomato earlier this week.

These developments prove how difficult it can be to succeed as a food delivery company in India, despite the wide customer base. Thus, a robust system and good tie-ups are necessary in order to survive. This is precisely the benefits Amazon will have in its venture.

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Owned by one of the richest men in the world, Amazon has no shortage of funds. Along with the ability to invest, Amazon also has the additional insulation of being a global brand-name. Additionally, Amazon’s delivery network is extensive and efficient.

India: A land full of promise

As of 2020, the Indian online food delivery sector’s revenue is somewhere close to $9,207 million. The projected growth rate this year is expected to be around 9.2% and by 2024, the market volume is predicted to increase up to $13,000 million.

Amazon Prime has a large customer base in the country, with subscribers doubling within a year and a half of the service’s launch in the subcontinent. As of data compiled by Barclays in 2018, India had approximately 7 million Prime subscribers, and the number is likely to have grown over the months.

With Bezos’ recent investment of $1 billion in India, it is evident the Amazon founder-CEO is set on increasing the retail giant’s footing in the country.

However, Amazon is in the middle of an anti-trust investigation sanctioned by the Competition Commission of India which blames it for squashing fair competition among its sellers by giving preferential treatment in the form of deep discounts and exclusive partnerships.

On his recent visit to India, Bezos was met by protests by the Confederation of All India Traders, a trade union taking a stand against Amazon’s exploitative ways.

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