Should Eternal, Swiggy Investors Worry as Amazon Enters Quick Commerce?
The quick commerce sector in India is experiencing a significant shift as Amazon introduces its 10-minute delivery service, Amazon Now, to Mumbai. This move could reshape the landscape of rapid delivery services in the country, raising questions among investors in established players like Eternal (previously Blinkit) and Swiggy. However, industry analysts from prominent financial institutions such as Emkay, JM Financial, Nomura, and Morgan Stanley suggest that the immediate threat posed by Amazon’s entry may not be as dire as it appears.
Amazon Now’s expansion to Mumbai is a strategic decision that aligns with the global retail giant’s mission to enhance customer experience through faster delivery times. The concept of quick commerce, which promises delivery within minutes, has gained traction in urban areas where consumers increasingly demand convenience. Companies like Eternal and Swiggy have already carved out a substantial market presence, offering a wide range of products and services that resonate with the needs of busy city dwellers.
Despite Amazon’s formidable presence, analysts believe that the existing players in the quick commerce space have established a strong foothold that could cushion them against the competitive pressures introduced by Amazon Now. The analysts argue that Amazon’s entry, while significant, is unlikely to drastically change the competitive dynamics in the short term. For instance, Eternal has developed a robust infrastructure tailored for swift delivery, with a network of dark stores strategically located to meet customer demands efficiently. This operational efficiency may provide Eternal with a competitive edge that could fend off the immediate threat posed by Amazon.
Moreover, Swiggy has diversified its offerings beyond food delivery, venturing into grocery and essentials delivery through Swiggy Instamart. This diversification positions Swiggy favorably against Amazon, which has traditionally focused on retail goods. Swiggy’s ability to adapt its services to meet consumer needs enables it to maintain a loyal customer base, even in the face of competition from a giant like Amazon.
The analysts also highlight that while Amazon’s brand recognition and resources are undeniably powerful, the quick commerce sector in India is characterized by a variety of local players and niche offerings. The competition in this space is not solely based on delivery speed; it also encompasses factors such as product range, pricing, customer service, and brand loyalty. For example, Eternal has focused on curating a wide selection of everyday essentials, promoting themselves as a go-to option for consumers looking for convenience without compromising on quality.
Investors should also consider the financial health and growth trajectories of Eternal and Swiggy, which remain strong despite the looming presence of Amazon. Eternal, for instance, has been expanding its footprint across various cities, continuously investing in technology and logistics to enhance its services. Similarly, Swiggy’s recent funding rounds have bolstered its cash reserves, allowing it to innovate and improve its offerings.
In light of these factors, it appears that while Amazon’s entry into the quick commerce market may bring about changes, it is not an immediate cause for concern for investors in Eternal and Swiggy. The established players have demonstrated resilience and adaptability in a rapidly changing market, and their existing customer bases are not easily swayed by new entrants.
In conclusion, while Amazon’s launch of Amazon Now in Mumbai is noteworthy and could eventually lead to intensified competition in the quick commerce sector, analysts remain optimistic about the prospects of players like Eternal and Swiggy. The diverse landscape of consumer preferences, coupled with the existing strengths of these companies, suggests that they can withstand the pressure of a new competitor. Investors should keep a close eye on the developments in this space but should not panic at Amazon’s entry just yet.
quick commerce, Amazon Now, Swiggy, Eternal, investors