Amazon Set to Enter Rapid Delivery Market in India by Early Next Year

Update: 2024-08-28 09:15 GMT
Picture Courtesy : Website

Amazon is reportedly preparing to launch its rapid delivery service in India, with the rollout expected in the first quarter of next year, according to sources familiar with the company's plans. This new venture represents a strategic pivot as Amazon aims to tap into the rapidly growing quick commerce sector, a space recently entered by its competitor Flipkart with its 'Minutes' service.


Sources indicated that Amazon has appointed a senior executive to develop its quick commerce strategy as part of a leadership reorganization. This move reflects the company's focus on this emerging market segment. An insider mentioned, "The growth in quick commerce cannot be overlooked any longer."


In parallel with its internal changes, Amazon is also in talks to acquire a stake in Swiggy’s quick commerce platform, Instamart. This development was first reported by ET on July 22. According to one executive close to the matter, "While efforts on the quick commerce front have been ongoing, we now have a more defined plan and timeline." Another source confirmed that the project is progressing internally within Amazon.


Approval from Amazon’s global headquarters is still required, as the company has not yet launched a quick service internationally. Additionally, Amazon India's head, Manish Tiwary, who is scheduled to leave the company in October, will not be involved in this initiative.


Nishant Sardana, who previously managed Amazon India's PC, audio, camera, and large appliances divisions, has been assigned to lead the quick commerce business. Ranjit Babu, the former CEO of Cloudtail and head of wireless and home entertainment at Amazon India, will now oversee consumer electronics, large appliances, and other related areas.


An Amazon India spokesperson declined to comment on the speculation surrounding these developments.


Shift Towards 30-Minute Delivery Services


Amazon's initial grocery delivery service, Pantry, has been integrated into the Fresh service, which offers two-hour delivery windows. The company is now working towards reducing delivery times to between 20 and 30 minutes. Sources noted that while Amazon maintains its existing next-day delivery options for both grocery and non-grocery items, the shift towards faster delivery times has significantly altered the market dynamics.


One source explained, "Although a final product is still under development, there may be scheduled deliveries, and the company plans to start quickly with select items. Amazon will be playing catch-up with both established and new competitors in this space."


The quick commerce sector has seen substantial changes throughout 2024, with significant expansions from companies like Zepto, which is finalizing a $1 billion funding round. This Mumbai-based startup is significantly increasing its dark store network and expanding its product offerings.


As the Diwali season approaches, the competition in e-commerce is expected to intensify, with platforms expanding their product ranges to include at least 20,000 items. Flipkart’s Minutes service, which recently launched in Bengaluru, is set to expand to New Delhi and Mumbai. Additionally, BigBasket is moving to a fully quick-delivery model, transitioning from its current mixed delivery approach.


For Flipkart, Minutes is a key priority, leveraging its extensive logistical infrastructure and broad product listings, including laptops and smartphones. The company plans to operate around 100 dark stores by the festive season.


India's e-commerce market grew by 18-20% in value in the first half of the year, with grocery sales surging by over 38%, largely driven by the rise in quick commerce. Estimates by 1 Lattice and Datum Intelligence suggest that the quick commerce market in India could reach $6 billion by 2025, a significant increase from its minimal level three years ago.


Quick commerce now accounts for nearly 40% of online grocery sales, with a growth rate of 230% from 2021 to 2023. Major players include Blinkit, Instamart, and Zepto. UBS's recent research highlights Flipkart Minutes' strategy of competitive pricing as a market entry tactic, noting that as of July, market share in quick commerce is approximately 40-45% for Blinkit, 20-25% for Swiggy Instamart, 15-20% for Zepto, and 10-15% for BB Now.



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