Amazon all set to enter India’s food delivery market

Weeks after Uber exited India’s food delivery market, conceding defeat to local giants Swiggy and Zomato, a new player is gearing up to challenge the heavily-backed duopoly: Amazon.

The e-commerce giant plans to enter the Indian food delivery market in the coming weeks, a person familiar with the matter told TechCrunch. The launch of the service, which would be offered as part of Amazon’s Prime Now platform, could happen as soon as next month, we are told.

In the run up to the launch, the e-commerce giant has been testing its food delivery service with select restaurant partners in Bangalore, the source said, requesting anonymity as details are still private.

The company has been working on its food delivery business for several quarters and was previously aiming to launch the service during the festival of Diwali. It’s unclear what caused the delay.

TechCrunch could not ascertain the kind of business agreement Amazon has entered into with restaurant partners. An Amazon spokesperson was not immediately available for comment.

Amazon’s foray into the food delivery market would create new challenges for Prosus Ventures-backed Swiggy, and Zomato, a 10-year-old startup that acquired Uber’s Eats business in India for about $180 million in January.

Both the startups, having raised more than $2 billion, are still not profitable and losing more than $15 million each month to acquire new customers and sustain existing ones.

Anand Lunia, a VC at India Quotient, said in a recent podcast that the food delivery firms have little choice but to keep subsidizing the cost of food items on their platform as otherwise most of their customers can’t afford them.

Figuring out a path to profitability is especially challenging in India as unlike in the developed markets like the U.S., where the order value of each delivery is about $33, in India, a similar item carries the price tag of $4, according to estimates by Bangalore-based research firm RedSeer.

More to follow…

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