Amazon Takes A Bite

Amazon invests in Deliveroo

Image source: George Rudy, bullet74, jiangdi, Beboopai - Shutterstock

What's going on?

Internet giant Amazon announced a major investment in European food delivery startup Deliveroo on Friday, loading up its moped in the race against rivals Just Eat and Uber Eats.

What does this mean?

Amazon, one of only three US companies to have joined the trillion-dollar club, led Deliveroo’s $575 million funding round – its eighth – becoming one of the takeout darling’s biggest investors (tweet this) and bolstering Deliveroo’s ambitions in the fast-growing food delivery fray. With a box full of cash on the back of its bike, Deliveroo plans to expand its footprint further, delivering to more hungry customers outside the UK and offering a wider choice of restaurants on its menu – including those operating out of so-called “dark kitchens”.

Why should I care?

The bigger picture: Second time’s a charm.

Amazon’s involvement may nibble into the long-term prospects of local restauriding rival Just Eat: the news saw its shares fall 8%. But this investment actually marks Amazon’s second attempt to join the UK food fight, following an ill-starred foray quietly abandoned late last year. “Amazon Restaurants” failed to deliver results – but if you can’t beat it, buy it. By taking a stake in Deliveroo, the king of ordering stuff online likely hopes a collaborative approach will be more successful in turning up the heat on market leader Just Eat.

For you personally: Lower costs are on the menu.

In an echo of the price wars currently sweeping the US, Amazon’s re-entry into the Takeshi’s Castle that is takeout via its new stake in Deliveroo may well drive costs down in an already fiercely competitive industry where winning your order can carry a prize of just a few dollars. Uber Eats’ February move to cut UK delivery charges may be a harbinger of more fun to come. With Deliveroo’s wallet now bursting at the seams and Uber sitting on a fresh $8 billion, the moped melee could make your Thursday night treat even cheaper.

Originally posted as part of the Finimize daily email.

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