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Here Are the Immediate Results of Amazon’s Deliveroo Investment

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Deliveroo drove Amazon out of the British market

Amazon (AMZN) last month led a financing round that raised $575 million for British restaurant delivery service Deliveroo. The immediate result of the investment is that Amazon will exit the restaurant delivery business. Amazon is discontinuing its Amazon Restaurants service, which has been delivering food from restaurants in parts of the United States to diners.

Amazon Restaurants launched in the United States in 2015 and entered the British market the following year. However, it met strong opposition in the British market, leading to Amazon shutting the restaurant delivery service in the country late last year. Deliveroo was one of the competitors that made life difficult for Amazon in the British restaurant delivery market.

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Amazon Restaurant subdued in the domestic market

Although Amazon Restaurants continued to operate in the United States after exiting the British market, it struggled to capture a significant market share. At the end of the first quarter, GrubHub (GRUB) led the restaurant delivery market with a 32% share, followed by DoorDash with a 30% share, and Uber’s (UBER) UberEats with a 21% share, according to Second Measure estimates. Amazon Restaurants belonged to the minority group that collectively held just a 7.0% share of the market.

The shutting of Amazon Restaurants service in the United States comes two years after GrubHub purchased Yelp’s (YELP) food ordering service Eat24 for about $300 million to bolster its position in the market.

Alibaba (BABA) is also into the restaurant delivery business through its Ele.me unit, which has contracts to deliver Starbucks coffee to customers across China.

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