Just a few months removed from opposing a ruling from India’s Competition Commission, e-commerce magnate Amazon has launched a food delivery service in the country. The service, which is called Amazon Food, will be available in select parts of Bangalore and comes in the wake of local companies Swiggy and Zomato cutting staff amid the deadly coronavirus pandemic.
The outbreak has forced both online food delivery avenues to scale down following Zomato’s acquisition of Uber Eats back in January, one that cost the former a reported $350 million.
Amazon, meanwhile, has invested over $6.5 million in India, having planned to launch Amazon Foods in the country last year. The rollout was pushed to March but that was also forced back after the Indian government issued a stay-at-home order, much like the rest of the world.
Per TechCrunch, the company had started testing food delivery with various Bangalore restaurants looking ahead to the launch.
“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,” a spokesperson from Amazon told said publication.
“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.”
Amazon previously launched Prime Now and Amazon Fresh to sell groceries and perishable items in India, subsequently expanding warehouses in various parts of the country. But, as of the time of writing, it hadn’t provided details regarding plans to expand the food delivery service across India.
Online companies have become more important with more people remaining indoors than ever before. Remote shopping and entertainment avenues are in high demand and online platforms presenting casinos from the comfort of one’s home, with free spins also on offer.
On another note, Amazon’s new venture in India could make business very difficult for Swiggy and Zomato. As mentioned above, the latter took over Uber Eats operations in India earlier this year for a hefty sum and both companies are reportedly losing more than $15 million on a monthly basis as they’re struggling to find new customers and keep existing ones – that is despite having raised over $2 billion combined.
Dunzo, funded by Google, is also in danger as a result of Amazon’s new push. The company relies on food delivery as a major source of income, alongside its bike taxi service.
According to Anand Lunia, a VC at India Quotient, food delivery businesses aren’t left with much choice but to keep lowering the cost of food items available on their platforms as most customers won’t be able to afford them otherwise.
There’s some difficulty in calculating profitability where India is concerned. The value of each delivery item in developed markets such as the U.S. is around $33, whereas, in India, a similar item is priced at around $4 per estimates from Bangalore-based research company RedSeer.
Swiggy has had to cut over 2,100 employees while Zomato has been forced to make around 520 positions redundant, given people’s fears when it comes to ordering food during the pandemic.
Swiggy has also scaled cloud kitchen operations and other business ventures down and both companies are getting less than 1 million orders each, significantly lower than the 3 million-plus they were logging earlier in the year.
In somewhat better news, the companies will roll out an alcohol delivery service this week as they look to take advantage of the nation’s high demand for such beverages amid the implemented lockdown, NDTV reports, citing statements from both Swiggy and Zomato.
India was one of the few countries to place restrictions on the sale of alcohol and tobacco in March but, since loosening things up, police officers had to deal with difficult crowds as persons have been lining up at liquor stores by the hundreds.
Deliveries will be made in select cities in Jharkhand, starting with Ranchi from Thursday, and Swiggy has revealed being in advanced talks with several states to make the service available in more locations.
Anuj Rathi, Swiggy’s vice president of products insists the move will prompt additional business for retail outlets, curb overcrowding, and promote social distancing.
“By enabling home delivery of alcohol, we can generate additional business for retail outlets while solving the problem of overcrowding,” Rathi says.