If there is a market, Amazon is either in it, or about to enter it. Having said that, the newest entry to Amazon India’s portfolio — Food Delivery. Coming to give Swiggy and Zomato a run for their money is Amazon Food, which has been launched in Bengaluru and will probably make its way to the entire country very soon. The platform will launch on Amazon’s Prime Now app, which, for the time being, only provides services in select cities.
The company has been wanting to launch the platform for a long time, but found nothing but bad luck. When Amazon was finally ready to go ahead with the launch in March, COVID 19 happened, which pushed the launch date even further. But now, Amazon is done waiting. For now, the service is only available in select areas in Bengaluru. These include Bellandur, Haralur, Marathalli and Whitefield.
The ordering procedure is quite similar to that of Swiggy and Zomato, which means that the platform will be prone to similar pitfalls as the other two companies.
As is the norm with any new food delivery platform, Amazon will probably roll out lucrative offers in the start, to attract customers and divide competition. This is also a major reason why the biggest players in the Indian market, Swiggy and Zomato are still burning about $15 million in capital every day to acquire new customers and not lose the old ones. This, after having raised around $2 billion individually, is not a great signal for new companies trying to launch in the industry. Food delivery services in India have had to rely on giving out major discounts to acquire customers.
This is mainly because the Indian market is different from say the U.S., where the average order costs about $33, as opposed to the $4 it costs for the former. Thus, profitability is a long way down the road for any of these companies. Amazon Food will also reportedly charge only about 10-15% of a food order from restaurants, which is almost half of what Swiggy and Zomato do. This would allow the company to provide better discounts, but also make it harder to reach profitability. But then, when you have Amazon’s resources to back you, reaching profitability may not be the biggest of initial concerns.
Times have been tough for all businesses, and more so for India’s food delivery unicorns. Both Swiggy and Zomato recently fired chunk of their employees, with Swiggy firing 1,100 employees and Zomato laying off 13% of its force, additionally cutting off the salary in half of those that were asked to stay. Swiggy has tried to improvise, by starting to offer liquor delivery in the city of Ranchi and plans to expand further across India. It is yet to be seen how that pans out for the company.