Amazon India food delivery plans
Amazon (AMZN) has set sights on the Indian market as it looks to expand its e-commerce empire. Likewise, the e-commerce giant is planning to launch an online food delivery service in the country. As part of the expansion, the company has already inked a strategic partnership with a local partner.
Catamaran is Amazon India’s strategic partner in the race for revenues in the burgeoning online food delivery sector. The Seattle-based firm is banking on the strategic partner to gain a head start in a market exhibiting robust growth. Data by Statista indicates that the online food delivery sector could generate as much as $7.7 billion in revenues in 2019.
Growth in the Indian online food delivery business stems from growth in middle-class disposable income. Similarly, urbanization as well as changing consumer lifestyles continue to fuel a CAGR of 12.8%. Internet penetration, as well as increased smartphone use is another factor fueling growth.
Bangalore, Delhi and Mumbai are some of the cities that present the biggest opportunities in the food delivery business. However, small players are playing close attention to small cities given their strong growth potential. In addition, the fact that small cities are unpenetrated makes them ideal for companies hoping to avoid competition from big players.
India Food delivery landscape
Reuter’s reports that Amazon plans for the new Indian online food delivery business are slowly picking up pace. For starters, the company has already started hiring staff. In addition, the hiring spree is in preparation for the launch of the food delivery business, ahead of the month-long festive season in September.
Amazon is not the only company in the race for revenues in the burgeoning India food sector. Likewise, Uber Technologies (UBER) is one of the companies that has already made its presence felt in the country. The ride-sharing company launched an online food delivery service as early as 2017. However, the company has struggled to fend off stiff competition from local operators.
Local startup Swiggy is one of the biggest players in India’s food delivery business. The fact that the startup boasts of Naspers and Tencent (TCEHY) as backers explain its success in fending off competition.
Similarly, Zomato is another big player in the country’s online food delivery service. The company continues to grow at an impressive rate thanks to backing from Alibaba’s (BABA) affiliate Ant Financial. The company already boasts of 80 million active monthly users. Likewise, Amazon India will have to be creative if it is to dethrone Swiggy and Zomato in the race for online food delivery revenues.
Amazon India’s push for customers in online food delivery makes a lot of sense. For starters, the company stands to attract customers to its other offerings. Such customers should go a long way in strengthening the company’s Prime services launched in 2016.
Currently, the e-commerce giant offers video and streaming services in addition to groceries. The addition of food delivery in Amazon’s Prime app should trigger an increase in daily users expected to boost transaction numbers.
The biggest threat to Amazon plans for the Indian market would mostly come from Walmart (WMT). For starters, the retailer has already entrenched its presence in the Indian market through a strategic partnership with Flipkart.
Amid the stiff competition, Amazon stands a higher chance to succeed, as it is not new to the territory. The company has already made a name for itself on food delivery with the launch of Amazon Fresh in the US. Above all, rapid growth has seen the company introduce a workplace lunch delivery as well in the US.