SUMMARY
The company is luring restaurants in Bengaluru with attractive commissions
Restaurants however are unhappy with Amazon’s solutions for tracking orders and income
Will Zomato and Swiggy move to meet Amazon’s offerings?
It’s no secret that Amazon is looking to enter India’s booming online food ordering and delivery market. The US-based tech giant’s plans came to light last month, and now it’s approaching restaurants and eateries in Bengaluru to sign up on its platform and is looking to launch before the end of the year, sources close to the matter told Inc42.
The ecommerce behemoth is trying to lure restaurants away from reigning players Swiggy and Zomato by proposing to take the lowest cut (also known as take rate) from the restaurant.
Amazon Targets December Launch
Amazon’s take rate is currently fixed at 6%, Bengaluru-based restaurateurs said. Madhav Kasturia, who runs a chain of 11 pan-Asian restaurants called Beijing Street in Mumbai and Delhi-NCR, told Inc42 that Amazon is charging 6% to 10% when not fulfilling the food delivery and 18% to 22% if the restaurant uses Amazon’s delivery service.
In comparison, Swiggy and Zomato’s take rate is usually in the region of 18-25% and varies between restaurants. The higher commissions for delivery are one of the main points in the restaurants’ protests against food aggregators.
Kasturia added that Amazon is looking to launch the service in December around Christmas. Earlier reports had suggested an October launch, though that may be on a pilot basis with a select set of users. Further, the food delivery option will be available in the Amazon app — presumably as a separate tab on top just like grocery is currently.
Restaurants Wary Of Amazon’s Food Delivery Terms
Not all is rosy in Amazon’s plans, however. Multiple restaurateurs complained that despite the lower take rate Amazon’s platform does not have very clear terms and conditions right now. “Amazon’s sales persons have asked me to contribute to the cost of delivery separately, and this charge is not being disclosed,” said one restaurateur who preferred to remain anonymous.
“Swiggy and Zomato include this charge in their take rate,” they added.
Moreover, Amazon’s sales teams have been unable to explain terms and conditions around promotions and discounts, some Bengaluru restaurateurs alleged.
Others told Inc42 that Amazon’s dashboard for restaurants to track order history and income is not adequate, and Amazon is simply not up to the standards of Zomato and Swiggy in this regard. So obviously, Amazon has a lot to work between now and the expected December launch.
Amazon India did not respond to Inc42’s queries till the time of publication.
Amazon’s foray into the cash-burn heavy online food ordering sector comes at a time when restaurants are protesting against large food-delivery aggregators for pushing deep discounts which hurts the already wafer-thin margins of the restaurant industry.
But the timing of Amazon’s launch could not be better. Since early August, restaurants part of the National Restaurant Association of India have been dropping out of Zomato’s Gold subscription scheme for dining out, and have also protested the introduction of a similar scheme for deliveries in recent weeks. For the past few weeks, the NRAI and delivery aggregators have been negotiating a new set of terms, but there has been little progress on this front.
The entry of Amazon will shakes things up in the foodtech sector. For Swiggy and Zomato, who were caught up in an intense two-horse race thus far, this new battle for supremacy with Amazon — which has plenty of cash to burn — could not have come at a worse time.
