Amazon is reportedly talking to various restaurants to bring them on board by trying to break exclusivity contracts restaurants have signed with food aggregators.

Amazon to take on Swiggy and Zomato with new food ordering service
Atom FoodTech Wednesday, August 21, 2019 - 07:42

Swiggy and Zomato have been able to keep most other competitors in the Indian online food delivery business at bay, narrowing down the fight to just the two of them. Now, Amazon wants to jump right in and take on Swiggy, Zomato and the likes in the food ordering and delivery space, as per an Economic Times report.

Amazon may target a Diwali launch from Bangalore and take it beyond in steps. The giant retailer is currently engaged in understanding the business and its teams are spreading out learning the nuances of the trade from the restaurants and cloud kitchens already associated with Swiggy and Zomato. Things like what kinds of dishes get ordered most frequently and so on.

The challenge here for Amazon is to lure those popular restaurants which have signed up with the two top players on exclusive bases and this is precisely what Amazon is trying to do now.  

The business will be called ‘Amazon Restaurant’ and Amazon is trying to assure the restaurants that they will be able to land more orders with their service. The aggregators are getting 15 to 17% from the restaurants. Amazon has a two-hour delivery model Prime Now, which will be used to build this food delivery business. Amazon plans to expand this model to include medicines and beauty products, going ahead.

The recruitments have reportedly started with Amazon’s local partner Catamaran Ventures floating a separate vehicle Prione Business Services for handling the food delivery business.

For the record, the cloud kitchens being contacted for a possible tie-up are FreshMenu, Rebel Foods, Foodpanda and Eat.Fit and in the category of restaurants, McDonald’s, Domino’s and KFC are some of the players.

It must be noted that the US retail giant has reached this level of going on its own to launch a food delivery business only after it had exhausted other ways of making an entry. It tried making strategic investments or outrightly taking over some of the existing players but has not worked.

The observers will now want to know how Swiggy and Zomato react to this development. The companies are already spending huge amounts each month subsidizing the prices for their customers. The restaurants have raised issues over the predatory pricing that is affecting their businesses directly. If Amazon comes in and Swiggy and Zomato are forced to increase their cash burns how will it affect their own financials?

Also read: Why 1,200+ restaurants are choosing to log off food apps like Zomato and Dineout

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