Amazon has joined India’s online food delivery market calling itself Amazon Food, starting with services in Bengaluru. With this move, the company will be competing with top local players – Swiggy and Zomato. The e-commerce giant, which has invested more than $6.5 billion in India, launched the food delivery service, in select parts of Bangalore.
The online service is available for the residents in Whitefield, Bellandur, Marathahalli, and Mahadevapura. Subsequently, Amazon Food will spread its wings to a few more cities in the coming weeks and provide the service to the rest of the country as well.
An Amazon spokesperson explained that the company started its food delivery service on the basis of customer feedback. The nationwide lockdown over the past few months has certainly taken a toll on the restaurant industry. The whole pandemic situation severely hit commerce. With this, their initiative also aims to help local businesses, especially food outlets who are facing a lot of hardships due to the pandemic.
This new delivery service allows customers to order prepared food from local restaurants and cloud kitchens. The local restaurants are being handpicked for which they have to pass the high hygiene certification bar of the company. In addition, to support homegrown businesses, some of the restaurants Amazon has itself associated with include Paradise Biryani, Faasos, Mad Over Donuts among many others. Amazon adheres to the highest levels of safety to maintain the quality, hygiene, and meet the expectations of the customers.
Difficult times for Swiggy and Zomato?
Amazon’s foray into the food delivery space in India could create new challenges for ventures like Swiggy and Zomato. Zomato is a decade-old startup that acquired Uber Eats’ business in India earlier this year. Together, they occupy a majority share of the food delivery market in the country. Establishing a duopoly in the market, recently, Swiggy laid off more than 2,100 employees and Zomato has eliminated about 520 jobs.
This was a result of the ongoing pandemic due to which people became cautious about ordering food online. According to reports, a large number of restaurants have already shut down permanently. Experts anticipate that the number of restaurants might shrink by 25-40% over the next few months.
With Amazon coming into the space, the challenge will only result in a tough competition. Swiggy and Zomato, having raised more than $2 billion but are still not cost-effective. They are losing more than $15 million per month while trying to gather new customers. Trying to hold on to the existing ones is quite a challenge as well.