Blog: Dean BestAmazon tries again in UK food delivery

Dean Best | 17 May 2019

Perhaps today's most eye-catching corporate food story here in the UK is Amazon's decision to invest in food-delivery business Deliveroo.

Amazon is already making waves in the country's grocery retail sector and it has felt like a matter of time before the US giant tried (again) to enter the foodservice market.

The company has already tried to crack UK food delivery, launching its Amazon Restaurants business in the country in 2016 but closing it two years later (Amazon Restaurants still does business in the US).

Amazon is taking part in Deliveroo's latest fundraising round, which has seen the London-based firm attract US$575m. To date, Deliveroo, which operates in 14 countries in total, has raised $1.53bn.

Specific details were not disclosed but Amazon is the largest investor in the latest round. Deliveroo said this tranche of funding would be used to grow its reach and to invest in Deliveroo Editions, its delivery-only 'dark kitchens'.

Will Amazon one day launch a move to take over Deliveroo? Who knows. But the investment is a further demonstration of Amazon's desire to grow its footprint in UK food.

Despite the failure of Amazon Restaurants, Amazon clearly still had an appetite to invest in the UK foodservice market and sees its investment Deliveroo as a better bet than going it alone. Shares in Just Eat, Deliveroo's much larger competitor in the UK, slid today in response to the news. Could the publicly-listed Just Eat look to team up with a partner?

In any case, it's a piece of news manufacturers need to watch closely.

"Shoppers' expectations are continuously increasing when it comes to getting the goods they want in a quick and easy way. We expect to see more competition amongst retailers to get goods to shoppers in more innovative and creative ways," analysts at industry researchers The IGD said. "In terms of Amazon's investment in Deliveroo, we might see Amazon Prime Now dark stores in the same warehouse as Deliveroo's dark kitchens, offering a convenient solution for shoppers to order their dinner for tonight whilst stocking up the cupboards at the same time."

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