Amazon has expressed its interests in hyperlocal delivery sector in India, a market currently dominated by local deliveries and small start-ups. The ecommerce giant is expecting to launch the grocery services in April and to speak of, this move is strategical to the core. Amazon wants to take advantage of the void left behind by hyperlocal delivery start-ups like Grofers and PepperTap which have recently shut down its operations in many cities and have also sort of halted the expansion plans.

Amazon_Kirana

Amazon is currently the largest online retailer in India and its foray in the local grocery segment will definitely make a huge impact. The company is rapidly pushing its initiative and in fact it has also launched the pilot for Kirana Now, an online grocery store for the masses. Amazon is setting up its own logistics and it seems that they have already hired quiet a good number of delivery personnel for the same purpose.

As we mentioned earlier, Amazon will be piloting the project in Bengaluru and post which the initiative will be expanded up to 10 cities within this year. Amazon will piggyback on its existing logistics setup and is most likely to spin off a dedicated unit for the hyperlocal deliveries. The company promises to deliver within two hours of receiving the order.

This move will not be affecting the traditional Kirana stores adversely, and in fact it will help them create a positive surge in sales thanks to Amazon’s delivery chain. The company will join hands with both the local retailers and also the modern retailers for fulfilling the orders.

Amazon’s latest initiative might lend a fresh blow to the already wimping Hyperlocal startups like Grofers and Peppertap. As we are familiar, Amazon sits on a huge war chest and it has enough resources to burn and bleed unlike the other startups who need to streamline their operations in order to bring about the optimum revenue. Hyperlocal deliveries suffer from the bane of thin profits, low commission rate and the salaries it has to pay its logistics, an equation that usually ends up in minus. Adding to this is the sky high cost of customer acquisition and the need to ramp up fast enough.

That being said, even the biggies have struggled to make a dent in the hyperlocal, take for instance Flipkart which started an app called Nearby in Bengaluru, has failed to gain traction. By the way the app helped you order groceries, electronics, clother and other things. Paytm has also shut down its operations pointing fingers at the poor demand.

It is interesting to see how the game shapes up and whether it will come to a level wherein the company that bleeds the most will lead. On the contrary, although Amazon has deep pockets it would still be quiet a herculean task to crack the grocery market, however by treading cautiously and by strategizing the moves, Amazon maybe able to gain an upper hand in the hyperlocal market.


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Senior Author

Mahit Huilgol is a Mechanical Engineering graduate and is a Technology and Automobile aficionado. He ditched the Corporate boardroom wars in the favor for technology battle ground. Also a foodie by heart and loves both the edible chips and the non-edible silicon chips.