Amazon threatens Zomato and Swiggy with its Food Delivery Service in India
Zomato and Swiggy have been facing tough time to improve their margins and make money in highly competitive food delivery space. Both the companies recently announced cost cutting measures to improve their performance. Both companies recently acknowledged that they are facing tough times due to coronavirus led lockdowns across India. Now, online retail giant Amazon has announced its entry in food delivery business in India. Amazon already has an amazing logistics and quick delivery network in India.
Amazon has been heavily investing in India and the company has gained significant market share in India during the last three years. With food delivery, Amazon will improve the efficiency of its last mile staff and at the same time, improve brand awareness among Indian consumers. Amazon already runs grocery delivery service in select cities across India.
Food delivery business is highly competitive in India and margins are very small. Zomato and Swiggy have spent massive amount for gaining customers. Both companies offered special discounts for people to use their food delivery service and have been advertising heavily. Zomato also bought Uber’s food delivery service last year to improve its market share. Uber was making loss in its food delivery business in India.
Zomato has been backed by Ant Financial while Swiggy has support from Naspers. But with entry of Amazon in the segment, it will be difficult for Zomato and Swiggy to remain competitive.