Amazon forays into food delivery, sets up direct fight with Swiggy, Zomato

Tech giant's food delivery service comes when major players in the space are reeling from Covid-19 impact

E-commerce giant Amazon has announced its entry into online food delivery in India, even as the country is still going through the lockdown to contain the Covid-19 pandemic.

Amazon Food, the service, was launched on Thursday in areas with select pin codes in Bengaluru while the company is learnt to be mulling scaling it up to other cities in the near future.
 

Customers are now allowed to order from select restaurants and cloud kitchens that have passed the company’s hygiene certification bar, it said.
 

Amazon’s foray into food delivery puts it in direct competition with established local players including Tencent-backed Swiggy and Alibaba-backed Zomato.

However, both these players have seen huge disruption in their business models as people resist ordering food from outside during the pandemic, forcing them to trim their workforce.
 

“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,” said an Amazon spokesperson.
 

“We are adhering to the highest standards of safety.”

Hundreds of restaurants and cloud kitchens including the Adigas, Khichdi Experiment, and Behrouz Biryani are live on Amazon in a few of the pin codes in Bengaluru.

The firm has partnered restaurant chains such as the California Burrito and Keventers and five-star hotel chains like the Radisson and Marriott.
 

The Indian food-tech industry is poised to grow at a compound annual growth rate of 25-30 per cent to $8 billion by the end of 2022, according to a report by Google and Boston Consulting Group.
 

However, during the ongoing lockdown phase, restaurants have been allowed to operate only delivery services as dine-in options are still prohibited in most cities.

Swiggy and Zomato have started delivering essentials to make up for some of the shortfalls in the restaurant delivery business.

However, revenues are down by over 75 per cent in April and May for most players in the sector, according to community platform LocalCircles.
 

Experts, however, said Amazon’s move into the food delivery space would help it target an even bigger share of the customer wallet if this becomes pan-Indian.
 

“This is clearly negative for Zomato and Swiggy, which are already struggling with much reduced businesses and closure of restaurants,” said Abneesh Roy, executive vice-president (research), Edelweiss Securities.
 

He said Amazon’s move might not necessarily be negative for Jubilant FoodWorks, which operates the Domino’s.
 

According to a LocalCircles survey of more than 24,000 responses, about 87 per cent of the respondents said they did not want to visit a restaurant in the next 30 days. It also said about 61 per cent were reluctant to spend on eating out.