With Amazon set to soon enter the food delivery space, reports suggest that it is looking to attract restaurants on board with commission rates of less than 10%, which could even be as low as 5% to 6%.
Currently, Zomato and Swiggy, which dominate the market charge around 18% to 24% commission.
Amazon is likely to kick off the food order delivery activity this October, starting with Bengaluru and moving to other metros like Delhi and Mumbai. Amazon is also reportedly in the process of completing the acquisition of Foodpanda from Ola though this is not confirmed as yet.
Amazon is also planning to have both the order booking model as well as the delivery model. In the order booking model, it will allow users on its ecommerce and Prime platforms to book food orders, which will then be passed on to the member restaurants signed up with it for delivery. This may have limited scope since only those restaurants, like the pizza outlets which already have a delivery model will be able to participate in this.
For the order fulfilment, Amazon is trying to use the infrastructure it has built up for its Prime Now service, apart from taking the Foodpanda delivery system in.
Though there may not be an immediate impact on Swiggy and Zomato who book around 1 million orders a day, it could prove to be a sticking point when the two established operators enter new territory or rework existing arrangements with the restaurants. There’s an ongoing stand-off that Zomato is facing with the restaurants on its platform, though the commission rate alone is not the issue there.