Amazon is planning to launch its cloud kitchen services in tandem with its food delivery service roll out in India, the Economic Times reports.
The Seattle-headquartered company is reportedly already in negotiations with restaurant chains and offering them commission rates as low as 6-8% to add them on its platform.
Amazon’s cloud kitchens and food delivery service will address supply constraints prevalent among online food delivery companies.
Its first cloud kitchen is being set up in Bellandur at Bengaluru. The company plans to make this a base to test deliveries and build up a market in the HSR Layout of Bengaluru.
Prione Business Services, the joint venture between Amazon India and Infosys founder Narayana Murthy-led investment firm Catamaran Ventures, will run the cloud kitchen services.
Amazon India will also launch its private food brands once its cloud kitchen services are rolled out.
The retail giant has reportedly been using talks between the National Restaurants Association of India (NRAI) and online food delivery companies to onboard more restaurants to its platform.
Amazon has reportedly offered some restaurants a commission rate of as low as 5% and has also been trying to convince restaurants to break their exclusivity contracts with Zomato and Swiggy.
Cloud kitchens are eateries without a dine-in facility. These facilities are considered to serve as an extra source of revenue and address supply concerns.
It was reported earlier that Amazon was planning to roll out its food delivery services in India by this Diwali, which falls between October and November.
Amazon was also in talks to acquire UberEats’ operations in India. Since the launch of its online food delivery services in May 2017, Uber has found it hard to compete with food-tech companies Zomato and Swiggy.
As of now, Amazon India allows its users to pay for online food deliveries from FreshMenu, Box8 and Swiggy through its digital payments platform Amazon Pay.
The online food delivery segment in India is set to grow at around 13% annually, at least until 2023, according to research and data repository platform Statista.
Statista also pegged revenues in the online food delivery segment at over $7.7 billion, with an estimated user base of 160 million customers.
Recent developments in the online food delivery segment:
Earlier this year, Zomato tripled its total revenue for the financial year 2018-19. The Gurugram-headquartered company’s revenue growth was attributed to the six-fold rise in its expenditure to scale operations. In June, Zomato expanded its services to over 300 cities across India.
Foodpanda India, the food-tech platform owned by ride-hailing unicorn Ola, had announced a pivot from food delivery services to cloud kitchens. The move was announced as part of its business repurposing initiatives.
Another food-tech unicorn Swiggy, owned by Bundl Technologies, launched Swiggy Daily, a service which allows users to order home-cooked meals from tiffin-services.