What Does Amazon's Entry in Cloud Kitchens Mean For Foodtech Space in India

Amazon is speculated to foray into cloud kitchen segment and launch private food brands in Bengaluru

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According to several reports quoting an analysis by Deloitte, the Indian online food delivery market for both aggregators and cloud kitchen is expected to become a $5 billion opportunity by the end of 2023. The reports also suggest the growth is estimated because of increased purchasing power and high demand.

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As the segment is predicted to grow to become a billion-dollar opportunity, several startups are looking to get a slice of the pie. According to recent media reports, e-commerce giant Amazon is also speculated to foray into cloud kitchen segment and launch private food brands in Bengaluru.

For the uninitiated, cloud kitchen can be understood as takeaway restaurant that do not offer dine-in facilities.

Amazon's Plans For Cloud Kitchen

According to media reports, Amazon may launch its pilot under Amazon Restaurants brand. This business will be managed by Prione Business Services, a joint venture between Amazon and Catamaran Ventures.

The report also revealed that Amazon may join hands with national restaurant chains and plans to offer lower commission of 6-8 per cent for at least one year as part of its food delivery launch. Citing anonymous sources, the report said that there is a supply problem in terms of restaurants and thus and Amazon is trying to fix that with the cloud kitchen.

The report also revealed that Amazon is looking to duplicate Swiggy's model where it would use its existing fleet to deliver ecommerce packages, complete restaurant orders and do grocery delivery.

This is not the first time Amazon has attempted to tap into the foodtech business. In August, reports said that Amazon had plans to partner with Ola-owned Foodpanda to foray into food delivery with speculations that the partnership could extend to an acquisition. Prior to this, the e-commerce giant was also reportedly in talks for acquiring the Indian arm of UberEATS.

What Does This Mean For Foodtech Startups

The growing foodtech space has been getting a lot of attraction from industry players. In February, media company Entrackr had exclusively reported that OYO had forayed into foodtech and launched over 20 cloud kitchens in Gurugram and Bengaluru.

In October 3 2018, Ola-owned Foodpanda also forayed into the cloud-kitchen segment after it acquired Holachef for an undisclosed amount.

The competitive foodtech market is at present majorly dominated by players such as Zomato, Swiggy, UberEATS, among others .