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.”

SoftBank’s renewed focus on early-stage companies in India

In India, SoftBank with its $100 Bn Vision Fund has led to several new entries in the unicorn club in the past few years.

Founded in 1981 and headquartered in Tokyo, SoftBank has international operations across broadband, fixed telecoms, e-commerce, finance, media, and marketing.

The unit was born in 2000 at a boom time for South Korean startups, expanding its focus beyond that country in 2011. Around half of its investments have been early stage.

The firm is now looking to set up a fund which focuses exclusively on early-stage startups. At present, there are over 416 venture funds who have a focus on the early-stage startups in India.

In India, SoftBank with its $100 Bn Vision Fund has led to several new entries in the unicorn club in the past few years. It has already roughly deployed over $10 Bn in Indian startups to date out of its $65 Bn- $70 Bn active investments of the vision fund.

After missing out on companies such as Swiggy and Zomato, it wants to identify future stars early and back them while they are half-unicorns. “We would like to invest $100 million in a firm with $500-million valuation,” said senior SoftBank executive.

SoftBank and its Vision Fund have invested more than $600 million in SenseTime, valuing it in the most recent round at $7.6 billion, a source familiar with the matter said, declining to be identified because the information is not public. SenseTime declined to comment.