Shanghai-based food delivery startup Yummy77 bagged US $20 million in funding from American e-commerce giant Amazon, in a deal that marks the first time the latter has invested in a Chinese company.

Amazon has invested US $20 million in funding in Yummy77, which has confirmed the investment via an official post on the Chinese social media site Weibo.

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The food startup will use the new capital to tap into new markets and back the expansion of its investor's China site.

According to a TechNode report cited by TechCrunch, this is the first time that Amazon has poured funding into a Chinese firm since it was launched in the Asian country ten years ago.

Under the terms of the investment deal, the US-based e-commerce titan will hold a minority interest in Yummy77, while the latter will continue to operate as a separate entity.

Because the online grocery market is experiencing a rapid growth right now, it is not surprising that Amazon chose Yummy77 as its first investment in the country, analysts said.

The said market is seeing a marked boom especially in big cities such as Beijing and Shanghai.

Other large e-commerce firms, like Taobao and JD.com of Alibaba Group, operate their own specialty food platforms. Like Yummy77, these sites offer gourmet food items and fresh groceries as their main products.

Yummy77's other rivals include Yihaodian.com, which is 51% owned by Walmart.

One advantage that online grocery stores have over physical stores is that they do not have to offer huge discounts to gain buyers.

A study by Kantar showed that each customer's total purchase is only 4% cheaper compared to brick-and-mortar groceries.

In December 2013, Yummy77's sales went past the US $16-million (CNY100-million) mark. As of February this year, the site has one million registered users, TechNode added.

Amazon has launched other marketing initiatives in China, which included the expansion of Amazon Web Services. Analysts said the move is one of Amazon's key strategies to keep up with Chinese e-commerce giant Alibaba, which runs its own cloud computing service called Aliyun.