Amazon Is Coming After Swiggy-Zomato Duopoly In India
Amazon.com Inc. is testing its food delivery service among employees before a full rollout in Bengaluru, according to three people aware of the development, as the retail giant prepares to disrupt India’s meal-ordering market that has turned into a duopoly.
The beta testing pilot allows select employees to order food via the Amazon app as part of the prime delivery service, the first of the people quoted above said on the condition of anonymity as the information isn’t public yet. The service is available for only a few locations in India’s startup capital.
The shortlisted staff can order from partner restaurants and cloud kitchens, the second person said, adding that employees have to share feedback. Amazon has begun to tie up with restaurants that have multiple chains in the country, the person said. It even reached out to Ola’s food venture, Ola Foods, that now runs its own cloud kitchen for a strategic partnership, the third person said.
The firm has ramped up hiring and is looking for people who have prior experience in running restaurants or cloud kitchens, the people said.
India’s food delivery market—that researcher Redseer sees quadrupling to $2.5 billion by 2021— has seen at least half-a-dozen ventures fold up in the last few years. Until last year, it was a four-cornered fight. But Ola pivoted from a restaurant aggregator to a cloud kitchen platform last year, and Uber Eats sold its India business. That left only two players standing: Tencent Holdings and Naspers-backed Swiggy and Alibaba Group-backed Zomato.
Amazon has a formidable delivery prowess that rivals some of the world’s biggest courier companies. Besides a logistics infrastructure, it has a network that brings grocery at the user’s doorstep in two hours.
“With food, it will be able to increase its offering to an area which has a high-frequency ordering opportunity,” said Sandipan Mitra, co-founder of HungerBox, an online delivery service for corporate clients, who has worked in the industry for a decade. It’s a two-player market and “only Amazon—with its deep pockets, technology and customers—can pull it off”, he said over the phone.
While Amazon’s first brush with food delivery via Amazon Restaurants wasn’t successful and the company rolled it back last year, Jeff Bezos, the world’s richest man, hasn’t given up on food delivery. Amazon acquired Deliveroo in the U.K, months later. While global plans are on hold as of now after the British competition watchdog started investigating the deal, the Seattle-based online retail giant is going ahead in India.
Amazon has defrayed or absorbed the cost of a massive delivery infrastructure, Haresh Chawla, partner at True North and an active angel investor, said in a twitter post. It could simply earmark mealtime deployment and operate at a fraction of the cost of a standalone food-tech company, he said.
Both Swiggy and Zomato have strong delivery networks, something that helped them survive and win over investors even as peers shut. And then they started charging for delivery and increased commissions for restaurants, prompting a backlash.
Amazon, which has committed a fresh $1 billion to take small businesses online, taking its total investments in India to more than $6 billion, would undercut these commissions. While restaurateurs expect that to help, but they are also concerned.
The commissions could fall from the current average of 20-22 percent, according to Anurag Katriar, president of National Restaurant Association of India. Be he sees the battle of acquiring consumers will kick off again. “This could mean another war of discount playing out in the food-tech industry, and that's a bigger worry.”