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Zomato and Swiggy face competition as Amazon enters Indian Food delivery market

Zomato and Swiggy occupy a majority share of the food delivery market in India and Amazon’s entry in this space could be a massive challenge for them.

The most popular e-commerce site, Amazon India, has decided to launch its food delivery operations in selected parts of Bengaluru. Amazon will be a tough competitor to the already existing food delivery Swiggy and Zomato.

This announcement by Amazon India has come out when Zomato and Swiggy announced to cut out over 1600 employees amidst the COVID-19 pandemic. Although, the service is in testing period for few months now.

Spokesperson of Amazon India said “Customers have been telling us for some time that they would like to order prepared meals on Amazon in addition to shopping for all other essentials. This is particularly relevant in present times as they stay home safe, we also recognise that local businesses need all help they can get.” The company hasn’t talked about its expansion plans in the Indian market.

“Amazon food will be launched in selected Bengaluru pincode allowing customers to order from handpicked local restaurants and cloud kitchens that pass our high hygiene certification bar. We are adhering to the highest standards of safety to ensure are customers remain safe while having a delightful experience.” the spokesperson added.

In initial stages, this service will be available in four places of Bengaluru namely Mahadevpura, Marathahalli, Whitefield and Bellandur covering over 100 restaurants. Some of the outlets that are included are Box8, Chai point, Chaayos, Faasos, Mad over Donuts and some restaurants from hotel chains like Radisson and Marriott. Shao, Melange and M Cafe among others.

Customers can place the orders through the Amazon app, but this option will currently be visible and available to customers in the live pin codes only.From the past six months, the food delivery service in India is being tested by Amazon among its employees.

Zomato and Swiggy occupy a majority share of the food delivery market in India and Amazon’s entry in this space could be a massive challenge for them. Zomato has already acquired the Indian business of Uber Eats, earlier this year so that it could build its position in the Indian market.

The nationwide lockdown, which started on March 25 has a bad impact on the business of restaurants which has forced Zomato and Swiggy to re-organize their business.

The CEO and Founder of Zomato, Deepinder Goyal posted a blog last week stating that “many aspects of the company’s business has changed to dramatically over the last couple of months and many of these changes are expected to be permanent. While we continue to build a more focus Zomato, we do not foresee having enough work for employees. We owe all our colleagues a challenging work environment, but we won’t be able to offer that around 13% of our workforce going forward.”

“The covid-19 pandemic has “severely impacted” the core food delivery business and this will continue to be the case over the short term. Swiggy will scale down its cloud kitchen operations as well.” Swiggy said.

Moreover, Swiggy on Thursday announced that, “We have started home delivery of alcohol in Ranchi and are in talks with various state government to provide support with online processing and home delivery of alcohol in their states.”

BankBazaar bags new investment from Amazon in series D funding

This current funding comes more than two and a half years after the global credit rating agency Experian had led a $30 million financing round into the company. It has raised total funding of more than $110 million to date.

BankBazaar, the online marketplace is responsible for aiding customers compare and choose financial products which includes credit cards, insurance, fixed deposits, saving accounts, mutual funds and others over a very secure, user friendly, and intuitive platform. It was Founded in 2008 by Adhil Shetty, Arjun Shetty, and Rati Shetty,

BankBazaar has partnerships with more than 80 financial organizations in India including the largest nationalized and private banks, NBFCs and insurance companies so as to offer a never before range of financial products and services.

Bank bazaar is supported by global investors including Sequoia Capital, Walden International, Amazon, Fidelity Growth Partners and Mousse Partners. Bank Banzaar has bagged Rs 29 crore as a part of its ongoing Series D round from existing investors including Amazon, Sequoia and Walden SKT Venture Fund, according to its filings with the Registrar of Companies.

“The funds from this round will be used to further strengthen our position as the leader in securing paperless access to loans, cards, and mutual funds,” Adhil Shetty, chief executive of BankBazaar said.

The company had last raised $59.1 million in a Series C round in July 2015 from Amazon, Fidelity Growth Partners, Mousse Partners and existing investors Sequoia Capital and Walden International. In January 2014, it had raised $13 million in Series B funding led by Sequoia Capital with participation from Walden International.

BankBazaar has issued 12,337 shares to Amazon for INR 5.6 Cr, 15,421 shared to Walden SKT Venture Fund for INR 7.1 Cr, 4,978 shares to GUS Holdings for INR 2.2 Cr, 5,782 shares to Sequoia for INR 2.6 Cr and 3,338 shares to Eight Roads for INR 1.5 Cr.

5 ways Amazon is nailing the e-commerce business in India

Here are a few things Amazon India has done to gain a competitive edge.

Amazon which aims at improving customer service globally has been cutting competitors out of the e-commerce race by providing killer service. There are certain things all other companies can learn from Amazon and aim at improving.

Here are a few things Amazon India has done to gain a competitive edge:

Lower prices

Unlike other e-commerce websites in the country, Amazon.in has done its ground research beautifully which helped them gain a competitive edge over other websites. They realised the importance of pricing and offer believable discounts on the website which has lead their sales treble in the festive season.

Amazon Prime

The company has come up with a loyalty programme which aims at improving customer experience. For INR 499, subscribers in 100 cities can avail single day delivery and have to pay no extra charges. The members of this programme also get to view the lightning deals about 30 minutes before everyone else.

Brilliant return and refund services

For returns and refunds, Amazon offers brilliant customer service. All you need to do is shoot a mail or call up their toll free number which is answered by trained Amazon officials who try and solve your problems in the most polite and courteous way possible. Unlike other websites, availing these services is really convenient for the customers.

Perfect delivery of orders

While other websites have often been reported to mess up orders and deliver bricks instead of the real product, Amazon has stressed on their delivery and nailed it each time. They also deliver orders on time and are rarely late. In this way, Amazon has been able to build a brand value which they have managed to sustain upon very successfully.

User-friendly app

Amazon mobile app was the first e-commerce app to be launched which allowed them to use a first mover advantage. The app is also very user friendly which attributes to 40% of the e-commerce giant’s sale.

Amazon pips Snapdeal to become India’s 2nd largest online marketplace after Flipkart

Amazon was India’s second-largest online marketplace by shipments last month, industry estimates show, as it dislodged Snapdeal to become the only major player to increase share from a year ago.

Market leader Flipkart’s share of shipments fell to 37% in March from 43% in the same month in 2015, and Snapdeal’s fell to 14-15% from 19%, show estimates by an investor tracking the logistics market and the chief executive officer of a logistics company that handles shipments for online retailers. Amazon India’s unit market share surged to an estimated 21-24% from 14%. Although the data are snapshots of shipments a year apart, they definitely point to a drop in the volume market share for the India-based companies. Other industry experts and analysts corroborated the numbers.

Also read: Indian e-commerce war: Flipkart’s Sachin Bansal & Snapdeal’s Kunal Bahl involved in Twitter spat

They said the data were evidence of the larger unit market share trend in India’s ecommerce industry, although at least one recent estimate pegs Flipkart and Snapdeal ahead of Amazon India by sales. “Amazon is very rapidly taking market share from companies like Snapdeal and other smaller players.

If there is no new entry, it will be a two-horse race (between Flipkart and Amazon) by the end of the year,” said Satish Meena, a senior analyst with Forrester Research. “If Flipkart is not able to get its act together in the next 6-12 months, Amazon can overtake Flipkart also.”

Morgan Stanley estimates that India’s online retail market, including delivery of food and grocery, will be worth $119 billion by 2020 from $16 billion in 2015. Flipkart said in June 2015 that it was aiming to sell goods worth up to $12 billion in a year; Snapdeal had claimed it would do better than Flipkart; and Amazon has not disclosed a sales target.

Also read: Top 10 Indian Startups and how they took off

If Amazon is gaining market share, it will be another instance of a multinational internet company showing signs that it can become the dominant player in India. In the ride-hailing business, San Francisco-based Uber says it is catching up fast with market leader Ola, which in turn contests the claim. Online retailers shipped 8-9 lakh products a day in March this year, with Flipkart, Amazon and Snapdeal accounting for about three-fourths of the shipments, the estimates show. ShopClues and Paytm rank next.

Flipkart, Amazon and Snapdeal did not reply to specific queries from ET on their shipments, market share and average order values. The gains by Seattle-based Amazon, which launched in India a little less than three years ago, follow aggressive investing in its local unit — CEO Jeff Bezos has so far committed to pump in at least $2 billion in India. Flipkart and Snapdeal, meanwhile, are forced to trim expenses and wean customers away from heavy discounts as they struggle to raise money from investors at present valuations.

A new element has been introduced to the equation by the government’s ‘guidelines’ earlier this month on ecommerce marketplaces.

Also read: 11 Times when Indian startup wars got very real

One of the main requirements is that no seller can account for more than a quarter of sales on a marketplace, and this could affect each company differently – Amazon and Flipkart have greater reliance on large sellers but not Snapdeal. Amazon has infused at least Rs 6,700 crore since January 2015 into its India unit, Amazon Seller Services, with over half of that amount being invested since December.

The company has channeled a lot of that money into improving the shopping experience for customers in terms of delivery and aftersales service, say investors and analysts. Amazon is also expected to introduce its successful Prime subscription programme in India.

“In 2015, we grew by more than 250% over 2014,” a spokeswoman for Amazon India said in an email. “We are on a momentum to deliver similar levels of growth this year but on a much larger base.”

In terms of gross merchandise value, though, Morgan Stanley in a February report estimated Flipkart’s market share at 45%, Snapdeal’s at 26%, and Amazon India’s at 12%. The GMV metric reflects the total value of all the goods sold on a platform but does not factor in discounts or reflect the actual commissions digital marketplaces earn on those sales.

Even with those estimates, entrepreneurs and investors say this year will mark a heightening of rivalry between Amazon India and Flipkart. Snapdeal is increasingly betting on diversification to try to monetise its existing users by entering into or partnering with other firms to offer services such as payments, travel bookings and food and grocery delivery that could bring repeat transactions. “We already have more than 1 million users transacting across our platforms daily, which is more than Flipkart and Amazon put together,” said a spokesperson for Snapdeal.

Also read: How Sachin Bansal started: Life of Flipkart founder

The battle between Flipkart and Amazon has primarily been in electronics, including smartphones, but the action is likely to shift to fashion where the former has made significant headway with Myntra that it acquired in 2014. Electronics accounts for a large portion of shipments but fetch commissions of 2-7% whereas gross margins in fashion can top 45-50%, according to Morgan Stanley.

“We have clear leadership of the online market in India with over 60% market share in three of the largest segments — smartphones, fashion and electronics,” said a Flipkart spokeswoman. “Our focus will be to consolidate this leadership position by continuing to build world-class customer experience, innovate retail in India and build a technology powerhouse out of India.”

Flipkart, under new CEO Binny Bansal, is pulling resources urgently to improve customer experience. Saikiran Krishnamurthy, who heads the service product group including after-sales services, was in March given additional charge of Ekart, Flipkart’s logistics unit, to improve customer experience by making the two divisions work together.

“Flipkart has to win back customers’ trust that they had till two years ago,” said Meena of Forrester Research.

Flipkart had targeted GMV of $10-12 billion for 2015-16. The company did not say if it met the target.

This article was originally published in The Times Of India

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