Amazon’s new food delivery service in Bengaluru might hurt Zomato and Swiggy due to its cheap commission rate, according to a study by Motilal Oswal institutional Equities as reported in Business Standard.
Amazon Food expanded its operations in Bengaluru recently with services across 62 pin codes in the city. It covers key localities like Whitefield, HSR, Sarjapur, Koramangala, Indiranagar, MG Road, Jayanagar, JP Nagar, Frazer Town, Malleshwaram, Rajajinagar and Vijayanagar among others.
Amazon Food charges restaurants 10 per cent which is less than half the 22-25 per cent charged by Zomato and Swiggy.
“Amazon will consistently keep taking rates below the industry average as it gains an additional benefit of increasing prime membership at the expense of losses in the food delivery vertical. Amazon’s expansion can pose a risk to Zomato’s road to profitability,” the study said.
On the other hand, Amazon Prime members get free delivery on all their orders, while others have to pay a delivery fee of Rs 19 on their orders.
Amazon's entry into the food delivery space has been a major challenge for Zomato and Swiggy that occupy a majority share of the food delivery market in the country. Earlier this year, Zomato had acquired the Indian business of Uber Eats to strengthen its position in the Indian market.
Deccan Herald is on WhatsApp Channels | Join now for Breaking News & Editor's Picks