A Deal between Amazon, and British food delivery

A Deal between Amazon, and British food delivery-Zem tour


Amazon
Amazon.com Inc. and British food delivery startup Deliveroo make in some ways
 cosier bedfellows than Uber Technologies Inc. does with its own competing service, Uber Eats.

The U.S. e-commerce giant led a $575 million financing round in London-based Deliveroo on Friday. One can't help but wonder whether the investment is an amuse-bouche for a broader tie-up, a chance for Amazon to get a detailed look under the hood of Deliveroo's operations before evaluating an acquisition. There are a lot of reasons why that would make sense.
There's the obvious one: Amazon wants a food delivery service. It shuttered the London operations of Amazon Restaurants last year amid a fierce price war with Deliveroo, Uber Eats and Just Eat Plc. But there’s merit in maintaining a presence in app-based food delivery services. Platforms in Latin America and India are already extending into products such as pharmaceuticals and groceries, and that approach could spread to other regions. That poses a threat to Amazon, not least because users tend to access food delivery apps more regularly, according to Chris Caulkin, a venture capital investor with General Atlantic in London.
The Deliveroo network of couriers must also appeal to Amazon. If you can ensure that the people making your deliveries have little or no downtime, they can make more money and are therefore less likely to go and work for a rival, since they are paid for each delivery they complete. If they are able to transport both goods from Amazon Prime Now, which promises deliveries within two hours, and Deliveroo meals, then the likelihood of downtime is reduced.

Deliveroo's push into so-called "dark kitchens" might also help with Amazon's logistics. These are facilities which aren't attached to a physical restaurant, often housed in shipping containers on affordable sites dotted around London. While the model remains unproven, the idea is to reach more customers without the pricey overheads that come with an actual restaurant. Those locations could also act as last-mile fulfilment centers for Amazon, and Deliveroo plans to use many of the proceeds from the latest fundraising to open new sites.
The brand cachet of Deliveroo, which tries to focus on convenience rather than fast food, meanwhile aligns well with Amazon's goals: it appeals to a similar customer base as Whole Foods, the high-end health food store that Amazon acquired in 2017.

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