Amazon launches grocery deliveries in Bengaluru2 min read . Updated: 04 Feb 2016, 03:18 AM IST
E-commerce firm has tied up with local stores and modern retailers such as Big Bazaar and Reliance Fresh
Bengaluru: Amazon India on Wednesday launched grocery deliveries in Bengaluru through a dedicated app called Amazon Now, preparing to compete with so-called hyperlocal grocery delivery businesses such as Grofers and PepperTap.
The Indian unit of the US giant, which is battling homegrown rivals Flipkart Ltd and Snapdeal (Jasper Infotech Pvt. Ltd) for dominance of the e-commerce market, has tied up with local grocery stores and modern retailers such as Big Bazaar, Reliance Fresh, Bharat Petroleum In and Out, Godrej Nature’s Basket and Food World among others, the company said in a statement on Wednesday.
The grocery delivery service is at present an app-only initiative.
The Amazon Now app will sell products across multiple categories such as snacks, beverages, cooking staples, beauty and personal care products among others, the company said.
Amazon Seller Services Pvt. Ltd, the Indian arm of the world’s largest online retailer, set up Kirana Now in March last year, wherein the firm partnered with local kirana (neighbourhood grocery) stores for delivery.
“We are encouraged by the learnings from Kirana Now. Customers can now choose more than 6,000 products from the ecosystem of kiranas and other favourite local stores and get these delivered using express delivery in two hours or scheduled deliveries," said Samir Kumar, vice-president, category management, at Amazon India.
Mint had reported on 19 January that Amazon will launch its grocery delivery business. The firm has hired hundreds of delivery men for the initiative and plans to expand to up to 10 cities in India this year. A majority of the orders will be delivered by Amazon’s own logistics service in order to ensure consistency.
Amazon’s entry will put additional pressure on Grofers (Locodel Solutions Pvt. Ltd) and PepperTap (Nuvo Logistics Pvt. Ltd), which are striving to prove that their business models are sustainable.
Last month, Grofers, which raised $120 million from Japan’s SoftBank Group and Tiger Global Management in November, shut operations in nine cities, citing poor demand. Rival PepperTap, backed by Snapdeal, has frozen expansion plans.
Among consumer Internet businesses, grocery delivery is particularly difficult as retailers operate on wafer-thin margins and pay less than 10% on every order to Grofers and PepperTap.
From that commission, the start-ups, which hire hundreds of people to pick up products from stores and deliver them, need to pay for salaries, marketing spending and other costs.
The biggest start-up in the grocery delivery segment, Big Basket, operates on an inventory-based model where it delivers products from large warehouses directly to shoppers.
In September, Flipkart Ltd started testing a separate ordering app called Nearby in Bengaluru to deliver groceries, electronics, clothes and other products. It has struggled to increase the number of orders from the app. Paytm, operated by One97 Communications Ltd, closed its grocery service in June, citing poor demand.
Online taxi-hailing service Ola (ANI Technologies Pvt. Ltd) also launched an app-only grocery delivery service called Ola Store in July last year.