Amazon’s plan to launch a food delivery service in India is something many have been aware of for some time now. It seems this endeavor is coming to fruition soon, with a new report claiming the service will be deployed in the country this Diwali. Furthermore, the e-retail giant is said to be investing an initial sum of $500million in this venture to help take on the likes of Swiggy and Zomato.
According to sources, Amazon plans to undercut its competition by offering lower commission rates to restaurants. One restaurant chain owner has even said that they were charged only one-fourth of what other players in field charge. For context, Swiggy and Zomato charge as much as 20 percent from restaurants.
Another strategy Amazon is planning to deploy is cloud kitchens that only offer food delivery and lack dine-in facilities. This would be coupled with an aggressive hiring process for new delivery agents in order to reduce delivery times. Other than faster delivery, Amazon will allegedly offer reduced prices and cashback schemes to customers who make use of Amazon Pay wallet.
The food delivery market in India is quite lucrative and has even been forecast to be worth $17 billion by 2023. Swiggy is perhaps the largest player in this scene, and it has gone as far as to raise $1.3 billion in funding so far and has been valued at 3.3 billion as of December of 2018. On the other hand, Zomato is said to have raised $750 million and comes in at a valuation of $2 billion.
In the above two cases, however, outside investors are involved, while Amazon is relying on its own funding. According to a source, “That’s a big advantage. The $500 million is just the first round of money to build it out.”
Although funding is not something Amazon might not have to worry about at the present moment, acquiring new customers will be a challenge considering how unforgiving the food delivery industry is. Case in point, Foddpanda offered meals at just INR in a customer-acquisition technique, but it did not help the brand that much.
Getting food delivered on time is another challenge, and while Amazon is punctual at having goods to your doorstep in 24-48 hours, food delivery is a more sensitive matter where every minute counts. Furthermore, it has been noted that most food order peaks take place during lunch and dinner, which leads to delivery agents being underutilized during the rest of the day.
Amazon is said to have come up with some sort of predictive technology in order to tackle this uneven demand. In their downtime, food delivery agents could be used to deliver parcels instead, which is an advantage other food delivery agencies do not share.