Amazon Expands Food Delivery Service in Bangalore

On Monday, Amazon announced an expansion of its food delivery platform, Amazon Food, to encompass 62 zip codes within Bangalore. This marks the first official update regarding the service since its initial launch in India last May.

The e-commerce giant confirmed that Amazon Food now serves prominent areas in Bangalore, including Whitefield, HSR, Sarjapur, Koramangala, Indiranagar, MG Road, Jayanagar, JP Nagar, Frazer Town, Malleshwaram, Rajajinagar, and Vijayanaga.

Initial Launch and Growth

When Amazon Food was first introduced in May of the previous year, its availability was limited to only four zip codes within Bangalore.

Despite remaining focused on a single key market in India, Amazon is actively working to offer more competitive pricing compared to established players like Zomato and Swiggy.

Pricing and Benefits

Delivery is provided at no cost to Prime members. Customers without a Prime membership will incur a delivery fee of 19 Indian rupees, equivalent to 26 cents – a lower cost than those charged by competitors such as Swiggy and Zomato.

Having pledged a $6.5 billion investment in its Indian operations, the company reports having onboarded 2,500 restaurants and cloud kitchens in Bangalore, also known as Bengaluru. Amazon Food customers can take advantage of special offers from these establishments, alongside cashback incentives from Amazon.

Expansion Strategy and Market Dynamics

The company has not publicly explained the relatively slow pace of expansion for Amazon Food within India.

Amazon often employs a strategy of testing new services with “two-way door” bets – initiatives that allow for easy adjustments based on initial results. This contrasts with “one-way door” bets, like Amazon Prime, which represent significant, long-term commitments.

Sameer Khetarpal, Director of Category Management at Amazon India, stated that the expansion in Bangalore aims to provide customers with exceptional convenience and value, while adhering to stringent delivery and safety standards.

Competitive Landscape

Zomato, backed by Ant Financial, and Swiggy, supported by Prosus Ventures, currently dominate the Indian food delivery market. Analysts at Bank of America estimate their combined market share exceeds 90%. Uber previously operated in this market but exited last year, selling its Indian food delivery business to Zomato.

This expansion occurs as Zomato prepares to launch its Initial Public Offering (IPO), further intensifying competition.

Challenges in the Indian Market

The Indian food delivery market presents unique challenges. Research indicates that the average order value is significantly lower than in developed markets like the U.S. – approximately $4 in India compared to $33 in the U.S.

However, both Zomato and Swiggy have demonstrated improvements in their unit economics over the past year.

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