Left Menu
Development News Edition

UPDATE 4-Amazon squares up to Uber with backing for UK food app Deliveroo

Reuters | Updated: 17-05-2019 17:18 IST | Created: 17-05-2019 17:06 IST
UPDATE 4-Amazon squares up to Uber with backing for UK food app Deliveroo
Image Credit: Flickr

Amazon has taken a stake in British online food delivery company Deliveroo, leading a $575 million fundraising to pit itself against Uber Eats in the global race to dominate the market for takeaway meals. The news the world's biggest online retailer had bought into one of Europe's fastest growing tech companies sent shockwaves through the sector, hitting shares in European rivals Just Eat, Takeaway.com and Delivery Hero.

The online giants are betting the takeaway market will expand as it branches out from fast, unhealthy meals to nutritious dishes and that they have the scale to beat smaller rivals which are still largely sacrificing profits to grow. Deliveroo founder and CEO Will Shu said the fundraising would enable the loss-making group to increase its reach, develop technology and pursue innovations such as expanding its own kitchens that can be rented to restaurants to meet demand.

Deliveroo did not give a figure for Amazon's contribution. It has now raised $1.53 billion to date, helped by existing investors T. Rowe Price, Fidelity Management and Research Co, and Greenoaks. Shu said: "Amazon has been an inspiration to me personally and to the company, and we look forward to working with such a customer-obsessed organisation."

The former Morgan Stanley banker launched Deliveroo after moving to London from the United States and finding a lack of delivery options when working late. He says he still delivers meals once a week to understand the job of the rider. Headquartered in London, Deliveroo uses 60,000 riders dressed in black and teal jackets to deliver meals from more than 80,000 restaurants and takeaway outlets in 14 countries including France, Germany, Hong Kong, Singapore and Kuwait.

Its "Frank" algorithm links the restaurants and riders with the customer, based on location, to cut the time of delivery. Deliveroo competes with Uber Eats, present in North America, South America, Europe, Asia and Africa, and part of the ride-hailing giant that has a market valuation of $72 billion after its recent flotation.

It also competes with the loss-making Takeaway.com platform which is in 10 European countries and Israel, and Germany's Delivery Hero. Operating in more than 40 markets with more than 290,000 restaurant partners, it hopes to break even in Europe in the second half of this year. Showing the fight underway in each market, Takeaway.com and Delivery Hero recently settled a costly struggle for supremacy in Germany, with Takeaway agreeing to buy its larger rival's businesses there for almost 1 billion euros ($1.1 billion).

In Britain, Deliveroo is locked in a battle with Uber Eats and the online platform Just Eat, and its riders are a common sight carrying delivery boxes emblazoned with its kangaroo logo. Just Eat, which originally connected customers with local takeaway restaurants that provided their own delivery service, has grown rapidly since it launched in 2001 and listed in 2014.

But it has spooked investors this year with its need to constantly ramp up spending to meet demand. Just Eat had a market valuation of 4.6 billion pounds ($5.9 billion) prior to Friday, when its shares fell 10 percent in early trading. Other challenges facing the sector include the push by riders to have workers' rights, an issue that is facing all parts of the gig economy, where people work for multiple employers without fixed contracts.

Analysts said Amazon's firepower and distribution capabilities could have a huge impact on the market and suggested the U.S. group might take over Deliveroo completely. "Amazon is known for its tolerance for losses, and its willingness to price-gouge in search of market share," Laith Khalaf, senior analyst at Hargreaves Lansdown, said.

Doug Gurr, Amazon UK country manager, said Deliveroo was an innovative company and the U.S group was excited to see what it did next. Amazon currently sells food in Britain through its Amazon Fresh, Amazon Pantry and Amazon Prime Now services and has a wholesale deal with supermarket Morrisons. But, according to market researchers Kantar Worldpanel, its UK grocery market share is still less than 1 percent.

It has previously tried and failed to run a restaurant delivery service in Britain. ($1 = 0.7826 pounds) ($1 = 0.8958 euros)



Rethinking Rural Livelihoods in the Times of COVID-19

The reverse migration caused by COVID 19 pandemic has put an additional burden of about one crore people on Indian villages particularly in the states of Uttar Pradesh, Bihar, Bengal and Odisha. Besides increasing the risk of spreading the ...

‘Discounted Deaths’ and COVID 19: Anthropology of Death and Emotions

Death is a social event rather than the mere cessation of biological functions. As seen by anthropologists, death is not just physical but intensely social, cultural, and political....

Indigenous knowledge of communities a must for maximizing impact of community work

Generally, it has been observed that the majority of the academicians in higher education institutions neglect the wisdom of community people and throw their weight around thinking that they know everything and the community knows nothing. ...

In rebuking FBR, Pakistan’s courts take a stand for public health

The system, if implemented effectively, will allow Pakistans revenue service to combat the illicit trade in tobacco products and potentially add hundreds of millions of dollars to the states budget each year. ...


Latest News

Kings announcer Napear suspended over remarks

Sacramento Kings play-by-play announcer Grant Napear was suspended from his sports-radio talk show after making remarks on social media over the weekend in regard to the Black Lives Matter movement. Napear was not on the air Monday for The ...

Venezuela's Maduro says he will visit Iran soon, sign agreements

Venezuelan President Nicolas Maduro on Monday said he would visit Iran shortly to sign cooperation agreements in energy and other sectors, after Iran sent five fuel tankers to the gasoline-starved South American country.I am obliged to go t...

UN appeals for restraint, ‘social cohesion’ as protests across the US continue

Responding to on-going protests that have spawned violence on all sides across dozens of US cities, the UN Spokesperson on Monday reiterated the Secretary-Generals appeal for grievances to be heard in peaceful ways, met with restraint by po...

Trump, Illinois governor spar during call over get-tough talk

A conversation during which President Donald Trump urged U.S. state governors to crack down on nationwide protests became testy on Monday when Illinois governor J.B. Pritzker accused Trump of making the situation worse. Trump, who last week...

Give Feedback