Amazon to foray into food delivery business in India, likely to partner with Infosys co-founder Narayana Murthy

E-commerce major Amazon is expected to foray into the food delivery segment and the US company may partner with Infosys co-founder NR Narayana Murthy for taking the venture pan-India, said news reports.

Prione Business Services, a joint venture between Murthy’s Catamaran Ventures and Amazon India, is reportedly in the process of signing deals with brands to list on Amazon, offering 10-15 percent commissions, said a report in The Economic Times, quoting executives at two restaurants.

The purpose behind Amazon’s move to enter food delivery is to build a comprehensive product portfolio – from grocery and food to electronics and home products – for its top customers who have availed of its Amazon Prime paid subscription service, said the report said.

The report points out Amazon’s food delivery has already opened for its employees and it has started pilot testing its service in select parts of Bengaluru. The venture may be launched across the country by March.

Interestingly, Amazon’s entry into the food delivery market is expected to create new challenges for existing players like Swiggy, and Zomato, a 10-year-old startup that acquired Uber’s Eats business in India for about $180 million in January this year.

In June last year, there were reports that Amazon was planning a foray into the burgeoning online food delivery business in India in 2019 in a move that could raise competition in an increasingly crowded market, reported Reuters.

The Seattle-based company was working with local partner Catamaran and began hiring staff for the new operation, sources said, declining to be named because the plans had yet to be made public. Amazon was aiming to launch the new service in September 2019.

India’s rising middle class has driven the growth of the online food delivery sector, with research firm RedSeer Consulting saying here order numbers rose 176 percent in 2018. Profitability, however, remains elusive. The industry is dominated by local startups Swiggy, backed by Naspers and Tencent, and Zomato, which counts Sequoia as an investor.

Uber Technologies launched its India food delivery service in 2017 but has been unable to keep pace with the local market leaders.

In June 2019, Amazon had closed its food delivery operations in the United States in the face of stiff competition.

In India, Amazon’s move into delivery from restaurants and takeaway food outlets would help it to attract customers for its other services.

The company launched its Prime services in India in 2016 and already offers services such as video and music streaming as well as grocery delivery in many cities across the country.

— With inputs from agencies