Amazon.com Inc. has aggressively expanded its Amazon Now quick delivery service in India, a move announced by CEO Andy Jassy during his first trip to the country. This expansion will see the service, which offers rapid delivery of various goods, extend to more than 300 Indian cities and towns, significantly increasing its footprint from an initial handful of cities and a subsequent scale-up to 100 locations. The company also confirmed an investment of over $300 million (approximately ₹2,800 crore) to bolster its operational network and safety measures, including scaling specialized fulfillment infrastructure to over 1,000 micro-fulfillment centers and integrating more than 16,000 farmers into its fresh produce distribution.
This rapid expansion by Amazon Now has intensified competition in India's quick commerce market, directly impacting established players like Swiggy (which operates Swiggy Instamart) and Eternal (parent company of Blinkit). Following Amazon's announcement, shares of Swiggy and Eternal experienced significant downturns. Swiggy's stock declined by as much as 2.66% from ₹286.20 to ₹278.60, while Eternal's share price fell by up to 3.8%, from ₹255.60 to ₹246. Its stock was the worst-performing among Nifty 50 constituents on the day of the announcement, coinciding with its Q4 earnings report, which highlighted the segment's focus on growth over immediate profitability.
Analysts are expressing concerns that Amazon's entry and substantial investment will lead to sharper pricing strategies and increased competition, putting further pressure on the thin margins characteristic of the quick commerce sector. This heightened competition may force existing players to increase their spending on growth and customer retention, potentially delaying their timelines for achieving true profitability. The market reaction underscores investor discomfort with the changing competitive landscape and the potential for reduced profitability for Swiggy and Eternal, despite Blinkit's strong growth estimates of 95-100% year-on-year in gross order value.
