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Amazon Invests in Fierce UK Food Delivery Competitor

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Amazon Restaurants shut down UK business

Amazon (AMZN) is leading a $575 million investment in Deliveroo, a UK-based online food ordering and delivery provider. Deliveroo operates in 14 countries, mostly in Europe, and its service is available in more than 500 cities and towns.

With this investment, Amazon is investing in one of the firms that forced it to shut down its own restaurant food ordering and delivery service in the UK. Deliveroo and Uber’s (UBER) UberEats have a tight grip on the UK food delivery market. Amazon announced in November 2018 that its Amazon Restaurants service was shutting down its UK operations. Since then, Amazon has focused on expanding its food delivery business in the United States, with the service launching in Richmond, Virginia, in March.

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Amazon Restaurants struggling for space in US market

But even in the United States, Amazon is still subdued in the food delivery market. According to Second Measure estimates, GrubHub (GRUB) dominates the food delivery market in the United States with a 32% market share at the end of the first quarter, followed by DoorDash with a 30% share, and UberEats with a 21% share. Amazon Restaurants is among the underdogs, alongside Square’s (SQ) Caviar, which together controlled a 7.0% share of the country’s food delivery market in the first quarter. GrubHub supercharged its food delivery business through a series of strategic acquisitions, including the 2017 purchase of Yelp’s (YELP) Eats24 for around $300 million.

Deliveroo, which has a network of 80,000 restaurant partners and 60,000 delivery people, said it will use the investment from Amazon to expand its business.

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