Swiggy catches Amazon’s eye, bags investment opportunity

India: Amazon and Swiggy have engaged into a lot of discussions over the past three months and negotiations are still in motion. The startup’s success in the food tech industry has also grabbed the attention of other investors, including Alibaba-backed Chinese food delivery venture Ele.me.

Swiggy’s discussions with Amazon in last few months has surely got people talking. The strong consumer focus portrayed by the company has created an interest in the Seattle based E-commerce giant. However, the startup is yet to achieve breakeven, even though it has raised more than USD 70 Million. This investment will create a partnership which will be beneficial both the ways, as Swiggy can help Amazon expand the scope of its grocery delivery business, Amazon now, and at the same time the deal will help Swiggy improve the utilization of its delivery personnel.

According to TechSci Research, Amazon’s investment prospect can be somewhat at risk. The market penetration of the online food delivery system is miniscule as compared to its competition in other countries like China, USA or UK. Yet, Swiggy promises a very bright future as the company has been successful in giving tough competition to its rivals who are basically market leaders in this segment. A recent report published by TechSci Research, “India E-commerce Market Forecast & Opportunities, 2020”, talks about the country’s e-commerce market which is projected to grow at a CAGR of more than 36% during 2015-2020. E-services segment, which comprises online travel, online payments, online classifieds, etc., is expected to continue its domination through 2020. However, the e-tail segment that includes electronics, apparels & accessories, health and personal care, etc., is expected to witness significantly higher market growth compared to e-services segment over the next five years. During 2015-20, the western region is expected to remain the largest e-commerce market in the country.

According to a recent report published by TechSci Research, “India Foodtech Market By Operation Type, By Source of Order, By Payment Method, Competition Forecast and Opportunities, 2011 – 2021”, the foodtech market in India is projected to grow at a CAGR of over 12% during 2016 - 2021. Over the last couple of years, the country’s foodtech market has been witnessing huge fund inflows from domestic as well as foreign investors. On the basis of operation type, the market has been segmented into two categories, namely, food aggregators and restaurant based. Among these categories, restaurant based segment dominated the overall market in 2015, and the segment is anticipated to maintain its dominance over the next five years as well, owing to consumer loyalty and frequent cashbacks/discounts offered by the companies. In 2015, Cash on Delivery was the most preferred mode of payment among Indian consumers. Moreover, web based source of ordering dominated the India foodtech market in 2015 as it offers seamless customer experience in terms of ease of ordering, choosing alternate payment options and order tracking.