Amazon.com Inc. (NASDAQ:AMZN) is partnering with investment company Catamaran in India to launch an online food delivery business. The food delivery business is a fast growing industry and the entry of Amazon means that competition will increase in the market that is increasingly attracting more players.
Amazon food delivery business to launch by September
The company and its Indian partner have started hiring staff according to sources privy with the plan and they could launch the business as early as September. Amazon is set to launch the new service from restaurants prior to the long festive season. The Seattle-based company is not being deterred by its failure to launch a food delivery business in the US and the UK and thus it is looking at the burgeoning Indian market. Last year the company shuttered the food delivery service in the UK after leading $57.5 million fund for Deliveroo.
The market in India is full of potential and growing fast and the online food delivery industry in India is expected show an annual growth of 16% by 2023. The market is driven by India’s growing middleclass who increasingly prefer online ordering and according to RedSeer Consulting the number of online orders last year grew exponentially by over 176%.
Amazon will transform the food delivery service in India
Despite the tremendous growth experienced in the Industry profitability is still elusive and the market is dominated by start-ups such as Swiggy that is backed by Tencent and Naspers and Zomato whose investor is Sequoia. The entry of Amazon in the market is expected to be a game changer because of its deep pockets thus it will have an edge over local startups as it can manage to spend generously on customer acquisition by carrying campaigns while at the same time pushing the Prime membership benefits.
In 2017 Uber Technologies Inc. (NYSE:UBER) launched a food delivery service in India but the business has not managed to keep up with the momentum of the local market leaders. There are rumours that Amazon is in negotiations to acquire the cab-hailing company’s food delivery business Uber Eats although that has not been verified.