Zomato, Swiggy could merge ahead of Amazon's entry in online food delivery business

India's leading online food delivery companies Zomato and Swiggy could merge soon amid looming threats from Amazon and UbeEats, according to a Tech2 report. Both Swiggy and Zomato are reportedly in discussions over a possible merger. Competition for market share in the food technology sector is expected to get ruthless with Amazon set to enter India market.

Previously, there were reports that Amazon has a reserved capital of Rs 3,500 crores to expand into online food delivery business in the country. As of December last year, Swiggy held almost half of the market share in terms of the number of orders, followed by Zomato and FoodPanda.

Although UberaEats was late to join the game, it still aims to catch up with the market size of Swiggy and Zomato. If Swiggy indeed joins forces with Zomato, together they will emerge as the single-largest player in terms of market share. However, it remains to be seen how this will impact delivery partners of both the companies.

Amazon's plan to disrupt India's online food delivery segment

Amazon is gearing up to launch its own online food delivery division to compete with Swiggy, Zomato and UberEats in the Indian market. It seems like Amazon has plans to disrupt the food retail business and gain maximum market share in the segment. Amazon India already has its existing workforce of delivery partners in place and the chances are that Amazon would put its current workforce of delivery partners to use in order to speed up the delivery process and stay ahead of the competition.

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Amazon is already expanding its India operations by pumping in over Rs 4,400 crore in its various units in India, including marketplace and food retail. This way, Amazon is stepping up more ammunition to compete against Flipkart. Amazon had registered cumulative losses of over Rs 7,000 crore across various units in 2018-19. Fresh funding is indicative of Amazon's confidence in the Indian market.

Given that Amazon and UberEats have doubled on their investment in the India market, cash burn over at Zomato and Swiggy is expected to increase. Over the last several months, Zomato is cutting down on costs to a significant extent. Deepinder Goyal-led company has also laid off around 600 employees and reduced spendings within the last few months.

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