Three-months after shuttering its food-delivery service in the US, the Seattle-based e-commerce behemoth Amazon is betting big on food ordering and delivery vertical in India–its fastest-growing market for e-commerce operations.
Coinciding its food delivery launch in India with the beginning of festive period starting September end when the country sees an increase in online spend, Amazon India is luring restaurants and hotels into onboarding them by offering a commission as low as one-fourth of what rivals Swiggy and Zomato charge.
All food ordering and delivery platforms charge a commission to restaurants ranging between 15-17% to provide food delivery service and technical assistance for restaurant discovery.
Amazon India has promised potential restaurant partners higher order volumes. Amazon’s entry into India’s food delivery sector will give restaurants more elbow room to negotiate with other players for lesser commissions, ideally below 10%.
“Amazon’s entry into the food aggregation space will give us a leverage on commissions,” an e-commerce head at a large fast-food chain that’s in talks with Amazon told a local newspaper Mint. “Between Swiggy and Zomato there is a third partner you can now operate with and explore, so suddenly the benchmark for commissions won’t be 18-24%, but something much lower,” the person said on the condition of anonymity.
Last month, National Restaurant Association of India (NRAI) that claims to represent 500,000 restaurants urged restaurateurs across the country to logout of the food ordering apps to protest the deep discounts these platforms offer users that ultimately leads to restaurants losing money. The high commission charged by Zomato, Swiggy, and UberEats just added salt to their wound.
Amazon is trying its best to woo restaurants away from its competition by signing up them at a commission of 5-6%, a fraction of the nearly 20%, charged by its opponents.