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Amazon Reminds GrubHub It Still Exists

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Amazon Restaurants begins operation in Richmond

Earlier this month, Amazon (AMZN) introduced its food delivery service, Amazon Restaurants, in Richmond, Virginia, according to a report from the Richmond Times Dispatch. In Richmond, Amazon joins GrubHub (GRUB), Uber, and other providers in the pursuit of online food delivery dollars. Amazon Restaurants launched in 2015 and has rolled out to about 200 cities across the United States.

In Britain though, Amazon shut down its food delivery service last year after only two years on the market as it came up against intense competition. But if Amazon’s American competitors viewed the shutdown of Amazon Restaurants in Britain as a sign that it was exiting the online food delivery business, the company has reminded them with the Richmond launch that they should prepare for a big fight ahead.

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A $15.5 billion revenue opportunity

In the food delivery market, Amazon is vying for a multibillion-dollar revenue opportunity. The food delivery market in the United States was estimated to be $8.5 billion in 2017. By 2020, the market is expected to grow to $15.5 billion, according to Pentallect predictions. GrubHub, which purchased Yelp’s (YELP) food delivery business, Eat24, in 2017, currently dominates the food delivery market in the United States, according to Second Measure estimates. Last year, GrubHub won a contract to deliver meal kits for Blue Apron (APRN), another Amazon competitor in the fresh food delivery business.

Alibaba (BABA) is another major e-commerce company that runs a food delivery business. Last year, Alibaba’s food delivery service, Ele.me, won a contract to deliver coffee to Starbucks customers in China.

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