Amazon's quick commerce foray: Should Zomato and Swiggy investors worry amid rising competition?

First Rapido, and now Amazon — the competition is intensifying for listed food-tech players like Zomato and Swiggy. For the second month in a row, new entrants are making bold moves into their turf.

Amazon is now trying to get its share of the quick commerce (QC) pie, with the launch of its services under the brand 'Now' in parts of Bengaluru, making the QC market a contest among at least seven large players.

The initial reaction remained negative, as both Eternal (formerly Zomato) and Swiggy share prices declined by up to 2% in trade on Tuesday. This was in line with analyst expectations, who see rising competition as a concern for stocks like Eternal and Swiggy but believe that medium-term growth ambitions for these companies will likely remain unaffected.

India's quick commerce market, which is at $12.6 billion now, is expected to grow 3.8 times to $47.7 billion by 2029. Zomato's Blinkit leads the space, with a 41% market share as of March 2025, followed by Zepto at 27% and Swiggy's Instamart trailing at 20%.

Amazon's QC Impact

According to Jefferies, while Amazon's 'Now' has a category presence that seems fairly expansive, well beyond grocery, although trailing some of the incumbents. The brokerage also finds the product pricing quite attractive, especially for Amazon Prime users, where discounts are even higher than QC incumbents.

However, the brokerage believes that the QC game may not be easy for Amazon given its late entry. It added that the entry of horizontal platforms like Flipkart and Amazon is more out of force as the users have been rapidly moving to QC platforms.

"For Amazon, we think these are early days, and the offering needs to have enough scale in terms of coverage to be a meaningful player in the overall QC market. This may require serious effort, including (cash) burn given Amazon lacks brand recall for QC, unlike incumbents," Jefferies said. Additionally, the brokerage believes that Amazon's QC offering is part of its app, while past experience suggests higher traction in the case of separate apps.

Brokerage JM Financial also flagged certain challenges that Amazon might face, like the time to build a large network of dark stores, mother warehouses and other logistics infrastructure essential for QC. "Moreover, we strongly believe recent entrants will have to launch a dedicated QC app in order to make meaningful inroads in the market. They will also have to heavily spend on building the brand, customer acquisition/retention, and differentiate basis service quality for consumers to consider switching platforms," it said.

Analysts, however, see margin pressure in the QC space ahead. "Amazon’s scale may trigger a fresh wave of discount-driven customer acquisition, compressing margins for all players. However, customer stickiness in QC remains low, and long-term success will depend on sustained fulfilment efficiency and differentiated value. Ultimately, while Amazon’s arrival raises the stakes, Zomato and Swiggy’s deep local expertise and ecosystem integration offer a robust defence—provided they manage burn rates and maintain service quality," said Nitin Jain, Sr. Research Analyst at Bonanza.

More pain ahead for Blinkit, Instamart?

Despite Amazon's quick commerce foray, JM Financial believes that the EBITDA losses may have peaked for Blinkit and Instamart in 4QFY25.

Recent checks suggest QC platforms such as Instamart and Zepto are increasingly encouraging customers to order high-value SKUs by offering higher discounts vs. low-value SKUs. In fact, product discounting on low-value SKUs has meaningfully reduced across platforms. Moreover, platforms are consistently collecting a mix of various charges from customers such as delivery, convenience, handling, platform and rain fees. Minimum order value restrictions for free deliveries have also increased across platforms. These trends, as per JM Financial, suggest that most QC platforms are increasingly focusing on improving their profitability.

"This makes us believe that Adj. EBITDA losses may have peaked for both Blinkit and Instamart in 4QFY25 itself, which can lead to a rerating of these businesses in the run-up to their 1QFY26 results," the brokerage said, assigning 'BUY' ratings to both Zomato and Swiggy.

Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.