Monday 2 March 2020

Amazon joins food delivery business in B’luru

Amazon joins food delivery business in B’luruBENGALURU: In the battle for consumer mind share in a highly competitive food delivery space dominated by established players Swiggy and Zomato, there is a new, albeit strong, entrant – Amazon.

With its already huge investments in a two-hour delivery supply chain for Amazon Now portfolio, the US ecommerce retailer is now piloting its much-anticipated project of delivering on-demand food to select localities in Bengaluru. This comes at a time when Swiggy and Zomato have cut discounts and tightened cost structures, and as ride hailing firm Uber backed out of the food delivery business in India altogether, having sold UberEats India to Zomato last month in return for a 10% stake, keeping a foot in the door nevertheless.

Amazon’s move to enter food delivery is part of a larger plan to build a comprehensive product portfolio – from grocery and food to electronics and home products – for its top customers who have availed of its Amazon Prime paid subscription service.

“Amazon does not care for timing... You can be last in a market and still win,” said an investor in the consumer internet space.

Of any consumer technology product in the country, food delivery gets maximum traction, followed by grocery, fast moving consumer goods and general ecommerce, the investor said.

“The intent is to capture all large categories where high-value consumers spend and make repeat purchases convenient, affordable and seamless, especially in the top cities,” a top executive at the firm told ET.

As of now, Amazon’s food delivery platform is open only to own employees and pilots are under way across five high density pin codes in the city –HSR, Bellandur, Haralur, Marathahalli and Whitefield, according to the executive and restaurant partners.

Amazon joins food delivery business in B’luru
Executives at two restaurants, who did not want to named, confirmed that Prione Business Services, a joint venture between Infosys cofounder NR Narayana Murthy’s Catamaran Ventures and Amazon India, has been signing contracts with brands to list on Amazon, offering 10-15% commissions.

The commissions are about half what Swiggy and Zomato charge its partner restaurants.

“The launch (of Amazon’s food delivery business) is scheduled in March, and the service will be launched on the Prime Now app,” one person aware of the plans said. The initiative is led by Raghu Lakkapragada, director-product management, at Amazon, according to sources and an email seen by ET.

Eventually, the etailer will look to launch exclusive brands partnering with restaurants for specialised cuisines including Korean and Japanese, he said.

“We believe in innovating on behalf of our customers. As part of this commitment, we are constantly evaluating new areas and opportunities to connect with and serve our customers,” an Amazon spokesperson said. Amazon will have to make significant investments in logistics, the restaurant ecosystem and technology and marketing to scale its food delivery business, experts and investors in the space said, in order to tackle Swiggy and Zomato head on.

Last week, Swiggy raised $113 million, led by South African internet giant Naspers, an existing investor. This came within a few weeks of Zomato acquiring UberEats India for about $350 million.

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