Watch out BigBasket and Grofers! Amazon begins its grocery delivery services in India with Amazon Now

A two-hour delivery service of daily essentials called Amazon Now has been started by Amazon India in Mumbai, following Bengaluru and parts of New Delhi.

The consumable are sold on the company’s website Amazon.in and Amazon Now, an on-demand delivery platform available as an Android app. Unlike Amazon.in, the online marketplace which targets monthly bulk purchases, Amazon Now provides daily or weekly top-ups of groceries, taking on online startups including Bigbasket and Grofers as well as traditional retailers such as Future Group.

“Daily consumables are shaping up to be one of our largest categories... Fashion, consumables and consumer electronics are neck-and-neck in terms of volumes," country manager Amit Agarwal told ET.

Though, the average sale price od a product is low, it has been anticipated by the analysts, that the category will be useful as it will help Amazon India boost repeat purchase and loyalty among regular online shoppers, whom the company is targeting through its Prime subscription service launched in July.

"Amazon will look to acquire the top 50-60 million of existing online customers who are spending very frequently online through services like Prime, which will be the first leg of their strategy," Satish Meena, an analyst at Forrester Research told ET.

In volumetric terms, the company’s fast moving consumer goods business has grown by about 200% year-on-year, by the end of August. "Amazon.in has witnessed strong growth in the category from tier-II and tier-III cities, with nearly 50% of the orders coming from outside the top eight cities," a spokeswoman for Amazon India told ET.

Pantry' product were introduced in Hyderabad this week by Amazon. The customers can select grocery and household essentials to be packed into boxes of up to 15 kg for home delivery the next day, with a shipping charge of Rs 20. Though, it is currently free for Amazon Prime subscribers.

"We see a very high degree of repeat usage and very big basket sizes that customers are shopping for," Agarwal added.