Amazon, the multinational giant is now broadening it’s horizons with it’s latest offering to deliver food.The food delivery service in Bengaluru can give stiff competition to other food delivery services and its further expansion in the India can cause more cash influx in the food delivery market.This could be a game-changer in the food delivery service.
Amazon may try to keep rates below the industry average as it may gain an additional benefit for increasing Prime membership at the expense of losses in the food delivery vertical. Unlike Amazon, Zomato and Swiggy do not have a peculiar reason in having lower commission rates.More competiton would mean a larger period of cash burn.
Amazon’s expansion can would possess a greater risk to the other major food delivery service , Zomato. Zomato’s profit can considerably lessen in case of a stiff competition.Earlier this week, e-commerce giant Amazon India had said it has broadened its food delivery service, Amazon Food to almost 62 pin codes across Bengaluru.More than over 2,500 restaurants and cloud kitchens are now reportedly serving customers on its platform. In addition the company also added close to 48 cuisines,Indian,Chinese,Burgers,Biriyani.
Amazon may not be charging any delivery fee to its Prime members while charging a minimal Rs19 for non-prime members.Commissions, a major area of dispute between restaurant owners and food aggregators are considerably lower on Amazon. India’s food tech industry could be worth USD7.5 USD8 billion by 2022.
The initial channel checks of restaurants in Bengaluru suggest Amazon is charging a take rate of 10% on order value from restaurant partners. This is even less than half of what other food aggregators like Zomato and Swiggy make from restaurants. In figures almost,22-25%, which has increased over the years.
Food delivery will inturn make people buy it’s Prime membership and act as a reason for users to make use of the Prime membership.This can inturn strengthen Amazon’s presense in the ecosysytem.In addition to online shopping,limited deals, video and audio content, food delivery is yet another foray into the Prime family. Amazon’s major interest in India remains its Prime membership, which should allow it to make up even for losses in the Food Delivery business.