Dive Brief:

• Reuters reports that Amazon is working with Indian investment firm Catamaran to launch a food delivery business in that market by September. 
• Food delivery is growing by triple digits in India, led by local startups Swiggy and Zomato. Uber entered the Indian market in 2017, but is not as formidable a player. 
• Amazon is reportedly in talks to buy Uber Eats India to add food order and delivery services to its Prime membership, which it launched in the market in 2016, Business Standard reports. 

Dive Insight:

Amazon isn’t letting its inability to successfully launch food delivery in the United Kingdom or the U.S. deter it from trying out other markets. After the company shuttered the service in the U.K. last year, for example, it led a $575 million fund for third-party delivery leader Deliveroo. Now the e-commerce giant is eyeing India, a market that is certainly ripe for growth. The online food ordering market in India is expected to grow by more than 16% annually through 2023, according to business consultancy firm Market Research Future.

With its steep growth trajectory and potential for habituation and frequency, restaurant delivery is no doubt a good space to capture more customers and transactions for Amazon. If the Uber rumors are true, Amazon would be able to scale its delivery service quickly to compete with the local favorites in Swiggy and Zomato.  

Amazon’s deep pockets could also provide a significant advantage over local startups, as it would be able to spend liberally on customer acquisition through promotions while simultaneously pushing its Prime membership benefits. As one of the two largest e-commerce players in India, Amazon is in a good spot to expand its services, as analysts predict e-commerce sales there will grow at a 26% CAGR through the next three years. 

Unlike the mature European market, the runway for food delivery growth in India is long. The United Nations projects that India will become the world's most populous country by 2027. The country now has 400 million millennials who make up nearly half of the country's workforce, are the chief wage earners in most households and are more tech-savvy than previous generations. In 2020, India will have the world's youngest population with a median age of 29, according to Morgan Stanley. This also bodes well for Amazon's entry into the market. Millennials are the key drivers of foodservice delivery and a market experiencing that much growth could support more than two local startups.