Amazon is joining India’s online food delivery market just as top local players Swiggy and Zomato reduce their workforces to steer through the coronavirus pandemic.
The e-commerce giant today launched its food delivery service, called Amazon Food, in select places in Bangalore. The company had originally planned to launch the service in India last year, which it then moved to March but there were further delays because of the nationwide stay-at-home order the Indian government issued in late March.
In the run up to the launch, the e-commerce giant had been testing its food delivery service with select restaurant partners in Bangalore, TechCrunch reported earlier this year.
“Customers have been telling us for some time that they would like to order prepared meals on Amazon in addition to shopping for all other essentials. This is particularly relevant in present times as they stay home safe,” an Amazon spokesperson told TechCrunch.
“We also recognize that local businesses need all the help they can get. We are launching Amazon Food in select Bangalore pin codes allowing customers to order from handpicked local restaurants and cloud kitchens that pass our high hygiene certification bar. We are adhering to the highest standards of safety to ensure our customers remain safe while having a delightful experience,” the spokesperson added.
Amazon’s foray into the food delivery market would create new challenges for Prosus Ventures -backed Swiggy, and Zomato, a 11-year-old startup that acquired Uber’s Eats business in India in January this year.
Both the startups, having raised more than $2 billion together, are still not profitable and are losing more than $15 million each month to acquire new customers and sustain existing ones.
Anand Lunia, a VC at India Quotient, said earlier this year that the food delivery firms have little choice but to keep subsidizing the cost of food items on their platform as otherwise most of their customers can’t afford them.
Figuring out a path to profitability is especially challenging in India as unlike in the developed markets such as the U.S., where the value of each delivery item is about $33; in India, a similar item carries the price tag of $4, according to estimates by Bangalore-based research firm RedSeer.
More to follow…