With Amazon Foraying Into The Food Space, Tough Times Ahead For Swiggy And Zomato?

The food-tech space of India has been dominated by existing players like Swiggy and Zomato; amid this, there is a strong entrant – Amazon. The US e-commerce major had already made huge investments in a two-hour delivery supply chain. Amazon is piloting its much-anticipated project of delivering food to specific places in Bengaluru.

Amazon plans to foray in India at a time when both Swiggy and Zomato, have cut down on discounts, and also tightened the cost structures. This was after the ride-hailing firm Uber backed out of the food delivery in India as a whole. Uber Eats India was sold to Zomato last year, in exchange for a 10 percent stake.

Amazon’s endeavor to enter the food delivery space is a part of the larger plan, in order to build a comprehensive product portfolio. This would range from grocery and food to electronics and home products; for its top customers, who have availed of its Amazon Prime paid subscription service.

Currently, Amazon’s food delivery platform has been made open only to its own employees, and it is piloting five high-density pin codes in Bengaluru, like HSR, Bellandur, Haralur, Maranthahalli, and Whitefield.

With Amazon foraying into the payments space, it would have to make significant investments in logistics. Even the restaurant ecosystem, technology, and marketing in order to scale its food delivery business; to tackle Swiggy and Zomato.

Swiggy has been making headlines since last week when it raised $113 million, by South African internet giant Naspers. Also, this happened a few weeks after Swiggy’s rival Zomato acquired Uber Eats India for about $350 million.

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Naspers Invests $113 Mn In Swiggy

Last August, Amazon had started onboarding eateries for its planned food delivery foray. In  2019, Amazon had shut down its four years old Amazon Restaurants delivery service in the US. It had invested in its food delivery platform Deliveroo in Europe. It also indicated the complexity of running a business at feasible unit economics. 

Leading investors have stated that it’s worth experimenting with building the business directly, rather than direct buying, or investing in a technology-first problem in India.