Amazon enters q-comm race: Can it seize the fast-lane market share?

Ah, those childhood adventures when a dash to the local kirana store was nothing short of a mission. Be it grabbing a pack of Maggi while the cricket match heated up or darting to fetch salt for mum in the midst of her culinary masterpiece, it was all about speed.

Today, that same urgency has evolved into a vibrant digital scene, where quick commerce brands are shaking things up with lightning-fast deliveries and ultimate convenience. Now, Amazon India has thrown its hat into the ring, joining the ranks of contenders in this fast-paced quick commerce race. 

Amazon India is gearing up to enter the quick commerce sector, operating under the code name ‘Tez’, with expectations set for a launch around December 2024 or January 2025, according to media reports. The name for the delivery service is still up in the air.

(Trivia: Google launched its mobile payments app named ‘Google Tez’, which was later rebranded to Google Pay in 2018)

This move positions Amazon to compete in a rapidly growing market, now worth $5.5–6 billion, dominated by players such as Blinkit, Zepto, and Swiggy Instamart. The next steps will be on the agenda during the first week of December, just in time for the annual Smbhav event, as per media reports. 

The US giant is also looking to hire the core team to on this project. Amazon's India grocery and essentials team described the job posting as "Greenfield, a ground-up initiative for an upcoming and fast-growing e-commerce space in India". 

In July 2024, the company founded by Jeff Bezos made an attempt to enter the quick commerce space by acquiring Swiggy Instamart, but the deal ultimately fell through.

Leading players in the quick commerce segment include Zepto, Swiggy Instamart, and Blinkit. Flipkart entered the space with Minutes in August 2024 and is now up and running in key cities. BigBasket too has jumped into the fast lane with a quick commerce model. Tata Neu has rolled out its own quick commerce service Neu Flash, while Myntra forayed into quick commerce with ‘M-Now’ in selected locations of Bengaluru.  

Can Amazon secure a significant market share in this highly competitive segment?

Manu Prasad, a fractional CMO and former executive at Scripbox (a wealth management platform), believes that Amazon's move into quick commerce was bound to happen due to the slowing growth in e-commerce (10-15%). 

He highlights that rivals such as Meesho and Flipkart are snatching up significant market share in tier-2 and tier-3 cities, while the quick commerce segment, growing at 125%, is further impacting Amazon's dominance in key categories.

Prasad also points out that Amazon's same-day delivery service through Prime has faced delays.

He notes that with its extensive Prime subscriber base, a vast seller network across multiple categories, and a robust logistics infrastructure, Amazon still has an opportunity to reclaim its competitive edge.

Samriddh Das, chief business officer at Arata, points out that quick commerce thrives on strategic real estate advantages, while Amazon excels in leveraging its compact warehousing and and a robust delivery network. 

According to him, the app is already ubiquitous on devices with pre-saved addresses and payment options, eliminating the need for new installations.

However, Das highlights a challenge with Amazon’s already cluttered app interface, noting that adding a quick commerce feature might just muddle the user experience. Conversely, rolling out a standalone app for quick commerce could face challenges in gaining early momentum, creating extra obstacles for Amazon as it steps into this competitive arena.

In 2018, Amazon partnered with private equity firm Samara Capital to acquire More Retail, a supermarket chain previously owned by the Aditya Birla Group. Amazon has currently repurposed one-third of More's stores as fulfillment centres to support its e-grocery operations.

It could potentially transform these locations into dark stores, enabling 10-minute deliveries. However, the company faces a limitation as More does not have a single store in key markets such as Mumbai or Pune, restricting its reach in these cities.

Three years ago, Amazon operated two distinct online grocery services: Amazon Pantry, which offered next-day delivery for bulk FMCG packs, and Amazon Fresh, which catered to smaller packs and perishables with a two-hour delivery window.

In 2021, these services were merged into a single, unified platform. Now, it appears Amazon Fresh may be further integrated into its quick commerce business model.

Quick commerce, initially focused on last-minute purchases, is now expanding its offerings to include consumer durables, electronics, gifting, apparel, beauty and personal care, and more.

The quick commerce platforms are incentivising higher-order values, typically offering discounts on order values above Rs 1,000 and Rs 1,500, to boost profitability.

According to marketing expert Lloyd Mathias, Amazon's established trust and credibility could position the company as a strong contender in the high-value product segment, distinguishing it from its competitors.

Given Amazon’s established logistics network and e-commerce infrastructure in India, the other quick commerce players are also preparing for this big battle. 

Zomato raised Rs 8,500 crore through a qualified institutional placement (QIP), which involves selling shares or other securities to qualified institutional buyers (QIBs).

Swiggy, on the other hand, raised Rs 4,500 crore through an IPO, with plans to open around 1,500 dark stores. Meanwhile, Zepto secured $350 million in funding and launched an advertising service called 'Jarvis.'

With the growing influx of investments, platforms are likely to adopt strategic moves such as lowering platform fees, expanding private label offerings, ramping up discounts, and introducing more SKUs or categories.

As the quick commerce battle heats up, one thing is certain: the consumer stands to benefit in every outcome.