Jefferies Ordered Meals On Amazon Food. Here’s What It Has To Say.
Amazon Retail India Pvt. will take time to scale up its food delivery services amid stiff competition from Zomato and Swiggy, which enjoy high customer loyalty due to early-mover advantage, according to Jeffries.
Many players including Runnr, Foodpanda, TinyOwl, Uber Eats and Ola Foods entered the Indian food delivery market in the past decade and met with limited success, Jefferies said in a report. "As a result, today, the market is largely divided between Swiggy and Zomato.” (Prior to Covid, according to Forester Research, Swiggy received 40 million gross orders a month and Zomato got 32-35 million).
While Amazon understands delivery and has a loyal customer base, food delivery would require calibration of strategy at different levels; hence, it may not be able to completely use its existing network, Jefferies said. Amazon’s foray will, however, increase competition due to lower take rates—the percentage of the transaction that it takes as revenue—customer offers and potential expansion outside Bengaluru.
Amazon Food was first started for its employees and then expanded to five locations within Bengaluru. It's now available in 62 pin codes in the city with a network of more than 2,500 restaurants and cloud kitchens.
The ecommerce giant levies no delivery charge for its Prime members. For others, it charges Rs 19 per order, lower than peers, and waives the packaging fee, according to Jefferies. Amazon also offers up to 60% discounts and cashbacks up to Rs 80 an order on payment through Amazon Pay, the report said.
Jefferies Experience With Amazon Food
Amazon App is somewhat cumbersome versus peers. The gap in delivery fees with peers does not seem to be very high for a reasonable-sized order.
There seems to be a better payment discount, particularly cashback on Amazon Pay.
The delivery experience has been good and ahead of schedule. However, the rider did not have a hot-bag. The biker was not wearing a brand T-shirt, a norm in the case of peers. Similarly, the bike also did not bear the company branding.
The number of restaurants listed were around 25% of that of Swiggy in the localities where Jefferies tried out.