Amazon, the world’s largest e-commerce firm is all set to further expand its Indian business with the entry in the food delivery segment. The company is in talks with Uber Eats to buy it Indian business. The company expects its Prime membership user base will further expand with the entry in the food delivery business. Amazon Prime already has more than 10 million members in the country and company priced its annual subscription at 499 rupees for young users (18-24) against the normal price of 999, to expand the user base.
Consumer electronics, fashion and books are the largest business segments which customers look for on Amazon Prime. The company expects a huge addition in Prime user base and number of visits on the app with the addition of food delivery service. “People order almost daily from a Zomato or a Swiggy. These apps enjoy immense client stickability. Amazon believes this could be a great add-on to its membership plan,” said a source.
Uber Eats has expanded exponentially since its launch in May 2017. The company takes 1.5 lakh orders per day on average and has a presence in 37 cities. The prime competitors of the company are Zomato and Swiggy which deliver 8 lakh and 6.5 lakh orders per day respectively. Uber Eats has a good presence in some big cities but it has not been able to take on the other two players so far. Zomato and Swiggy have 150,000 restaurants and 200,000 delivery partners across the India.
A company like Amazon with deep pockets could help Uber Eats to take on bigger rivals. The deal would be mutually beneficial as it would give Amazon the chance to reenter in the food delivery market. Earlier the company shut down Amazon Restaurants delivery service in the United Kingdom and the United States. However, the company is once again pushing for food delivery business and this year it invested in London based food delivery startup Deliveroo.
Uber Eats is planning to enlist on stock market and eyes 300 million dollars valuation. Earlier Swiggy and Zomato were in the race to buy the local unit of Uber Eats but the deal could not take off due to differences over valuation.
Amazon is looking to expand its Indian business as its prime competitor Walmart got in the Indian market with 16 billion dollar acquisition of Flipkart. India is the new battleground for the tug of war going on between Amazon and Walmart for dominance over online and offline retail markets. Amazon is planning to pump another $5 billion into the Indian market as competition for dominance over the Indian retail market intensifies.
Walmart was the first to move into the Indian market between the two companies. It entered the Indian market in 2009 in a joint venture with Bharti Airtel but the company could not grow due to corporate governance issues. Its financial sheet remained in red since its inception. Amazon entered the Indian market in 2012; the company is growing exponentially in India and it is the fastest-growing unit of Amazon in the world.