Amazon's quick delivery initiative has led to a loss of $15 billion for India's Eternal and Swiggy.

      Amazon spent several years exploring India's quick-commerce market without making a definitive commitment. Investors have now concluded that this phase is over and have adjusted their valuations of the established companies accordingly.

      Shares of Eternal, the parent company of grocery delivery leader Blinkit, as well as rival Swiggy, have seen significant declines as Amazon ramps up its rapid-delivery operations in the country. Eternal's stock has dropped around 28% from its all-time high in October, while Swiggy has seen a decline of approximately 47% from its peak in September. Together, the two companies have lost more than $15 billion in market value, a selloff that Bloomberg associates directly with investor concerns regarding the magnitude of Amazon’s involvement.

      The catalyst for this change is Amazon Now, the company’s "delivery in minutes" service, which it intends to expand to over 300 cities as it develops a more extensive fast-delivery network. This unit has been one of the fastest-growing segments of Amazon India, with orders reported to have doubled every quarter since its launch. A foreign competitor with such growth potential, combined with Amazon’s financial resources, poses a significant threat to existing players in the market.

      Until now, quick commerce in India has been a tightly contested field. The top three platforms—Blinkit, Zepto, and Swiggy Instamart—together account for roughly 95% of the market share, with Blinkit holding around 46%. This market concentration has made the sector attractive enough for Amazon to enter, while simultaneously threatening the companies that originally developed it.

      Concerns are less about losing the leading position and more about the costs associated with defending it. Increased competition in quick commerce often affects income statements in less glamorous ways: the need for deeper discounts to retain customers, higher delivery expenses, accelerated and costlier construction of dark stores enabling ten-minute delivery, and pressure on advertising revenue that was anticipated to make the business profitable. Amazon doesn’t need to triumph to negatively impact Eternal and Swiggy; simply making winning more costly is enough.

      This dynamic explains the recent selloff. Both Eternal and Swiggy had been conveying a narrative to investors about transitioning from rapid growth to sustainable profitability. Amazon’s expansion has extended this journey, prompting the market to lower its valuations reflecting the increased timeline.

      This isn’t the first instance of Amazon attempting to penetrate the Indian food and grocery delivery market. The company had previously introduced a food delivery service aimed at Zomato, the earlier version of Eternal, and Swiggy, a venture that did not significantly alter the market landscape.

      What differentiates the current situation is the rapid delivery model and the extensive rollout, which focus on the most lucrative and competitive segment of the industry rather than the slower-paced restaurant delivery sector.

      India's quick-commerce market has become a focal point in global e-commerce, attracting various players, including Prosus, which has a stake in Swiggy, along with several well-financed local competitors. Amazon's entry transforms this into a battle of attrition among financially robust rivals.

      The decline in share prices does not alone serve as a judgment on the businesses themselves. Eternal and Swiggy remain market leaders, and the selloff mirrors concerns about future profit margins rather than a decline in current demand. What the market has factored in is increased competition, and it is now up to Amazon to demonstrate how this will unfold.