Amazon India has launched its food delivery service, Amazon Food, in select pin codes of Bengaluru.
The development comes at a time when order volumes for the two largest players in the online food delivery space — Swiggy and Zomato — have hit an all-time low due to the Covid-19 pandemic. The food delivery apps have also reduced staff strength to trim expenses and increase cash runway.
Amazon Food has gone live in parts of Bellandur, Haralur, Marathahalli and Whitefield, according to the app.
“We are launching Amazon Food in select Bangalore pin codes, allowing customers to order from handpicked local restaurants and cloud kitchens that pass our high hygiene certification bar,” an Amazon spokesperson said.
The US-based ecommerce behemoth has been wooing eateries with competitive commissions since mid-2019 as a part of a larger initiative to build a comprehensive product portfolio – from grocery and food to electronics and home products.
“This network will expand to a few cities, with higher density in a few weeks,” said a person directly aware of the matter. ET reported last year that Amazon was giving attractive offers to onboard restaurants for the service.
Restaurant industry hit by Covid-19
The launch comes at a time when the restaurant industry has been severely impacted by the nationwide lockdown over the past two months.
Top eateries are looking to create own distribution channels for sales and to circumvent marketplaces, which in some cases charge commissions of as much as 20%.
“We need to break the customer’s habit of ordering from (aggregators), and build a new habit to order directly from us,” Riyaaz Amlani, CEO of Impresario Entertainment and Hospitality, which runs Socials and Smoke House Deli, said during a recent press conference called by the restaurant industry lobby, the National Restaurant Association of India.
According to a report by RedSeer Consulting, food delivery orders dropped around 80% in April due to concerns over infection spread, many people working from home, lockdowns and stoppages of operations.
In small towns, the slowdown in discretionary consumption as well as shutdowns at a few pin codes due to the virus outbreak also led to a drop in orders, the firm said. Online food order numbers will take at least one year to recover, analysts said, pushing food aggregators to expand to adjacent categories like delivery of groceries and alcohol.
ET reported earlier that four out of 10 restaurants would likely shut in the aftermath of the Covid-19 crisis, according to NRAI.
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