Global ecommerce giant Amazon continues to invest to further enhance its business in India, this time with the launch of another grocery delivery portal, Amazon Fresh, under Prime Now. Notably, Amazon Fresh was launched in Seattle in 2007 and has been the flagship food and grocery delivery offering globally.
In India, Amazon had opted to reserve the launch of Fresh and instead started express deliveries of food items through its Prime Now app in Bengaluru and few other cities. Amazon Fresh store will enable grocery delivery of daily essentials for select pincodes in Bengaluru in two hours. The service will be launched in Bengaluru tomorrow (August 23), with roll out planned for other cities as well.
Amazon Fresh lets customers place orders across a selection of over 5000 fruits and vegetables, dairy, meat, ice-creams, and dry grocery like staples, packaged food, personal care and home care. The service is available exclusively for Prime members with fastest 2 hour delivery slots for INR 49.
All customers get convenient 2-hour delivery slots from 6 AM to midnight with free delivery for orders above INR 600. Orders below INR 600 will be charged a delivery fee of INR 29.
The service is an extension of Amazon’s Prime Now service, which was enabled only via separate app earlier. However, the Prime Now app, will continue to serve customers in Delhi/NCR, Mumbai, Bengaluru and Hyderabad.
Amazon has been continuously diverting investments towards food retail services, after facing several FDI restrictions. It is to be noted that Amazon grocery services had been a major plan for Amazon’s food retail plans for India, for which it has committed $500 Mn, of its $5 Bn commitment to its market in India.
Amit Agarwal, Amazon India head, had earlier said that Amazon expects groceries and household products to account for over half of its business in the country in the next five years, as it moves to broaden offerings in the segment and foray into areas such as fresh produce.
As of April 2018, Amazon India had 67 fulfilment centres across 13 Indian states. On top of it, the company’s processing units are said to be spread across 19 Indian states and employs thousands of people, a testimony to the company’s vast delivery network across India.
Amazon has reported a 17% growth in net sales reaching $59.7 Bn in the first quarter of FY19, compared with $51 Bn in first quarter 2018. The company’s operating income increased to $4.4 Bn in theQ1 2019, compared with operating income of $1.9 Bn in Q1 2018.
According to a Goldman Sachs report, the Indian online grocery market is estimated to reach $40 Mn (INR 270 Cr) by FY19, growing at a CAGR of 62% from 2016 to 2022. Morgan Stanley expects the online food and grocery segment to become the fastest-growing segments in India, expanding at a CAGR of 141% by 2020 and contributing $15 Bn or 12.5% of overall online retail sales. In Grocery space, Amazon Fresh will be competing against Alibaba-backed BigBasket, SoftBank-backed Grofers, among other players.