LONDON (Reuters) – Amazon has taken a stake in the British online food delivery business Deliveroo, the result of a $575 million fundraising pit themselves against Uber Eats in the global race to dominate the market for take-away meals.
The news of the world ‘s largest online retailer had bought in one of Europe’s fastest growing technology companies sent shock waves through the sector, hitting shares in European rivals Just Eat, Takeaway.com and Delivery Hero.
The online giants are betting that the pickup market will grow branches from fast, unhealthy meals to nutritious food, and that they have the scale to beat smaller competitors that have largely sacrificing profits in order to grow.
Deliveroo founder and CEO Shu said the fundraising would allow the loss-making group to increase the range, the development of technology and the pursuit of innovations, such as the expansion of her own kitchen that can be rented out to restaurants to meet demand.
Deliveroo not give a figure for Amazon’s contribution. It’s 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 the company, and we look forward to working with a customer-obsessed organization.”
The former Morgan Stanley banker launched Deliveroo after moving to London from the United States, and the finding of a lack of delivery options when you work late. He says that he still delivers meals once a week to understand the job of the rider.
With headquarters in London, Deliveroo makes use of 60,000 horsemen dressed in black and teal jackets to deliver meals to more than 80,000 restaurants and takeaway food shops in 14 countries, including France, Germany, Hong Kong, Singapore and Kuwait.
The “Frank” algorithm links the restaurants and riders with the customer, based on the location, to the time of delivery.
Deliveroo competes with Uber, Eat, present in North America, South America, Europe, Asia and Africa, and a part of the journey from giant that has a market value of $72 billion euro after the recent ipo.
It also competes with the loss Takeaway.com platform in 10 European countries and Israel, and Germany Delivery Hero. Operating in more than 40 markets with more than 290,000 restaurant partners, hopes to break even in Europe in the second half of this year.
The display of the battle going on in each market Takeaway.com and the Delivery Hero recently settled a costly struggle for supremacy in Germany, with Takeaway agree to purchase its biggest rival of the businesses there for nearly 1 billion euros ($1.1 billion).
In great Britain, Deliveroo is embroiled in a battle with Uber Eats and the online platform Just Eat, and the riders are often seen wearing delivery boxes, decorated with the kangaroo logo.
Just Eat, which was originally connected customers with local takeaway restaurants which have their own delivery service, has grown rapidly since its launch in 2001 and in 2014.
But it is shocked investors this year, with the need to constantly ramp up spending to meet demand. Just Eat had a market value of 4.6 billion pounds ($5.9 billion) for Friday, when the shares fell 10 percent in early trading.
Other challenges for the sector the push by the horse riders have the rights of the workers, a problem that is faced by all parts of the performance of the economy, where people work for multiple employers without fixed contracts.
Analysts said that Amazon is the firepower and the distribution can have a huge impact on the market, and suggested that the AMERICAN group might take over Deliveroo completely.
“Amazon is well known for his tolerance for losing, and the willingness to price-gouge in the search of market share,” Laith Khalaf, senior analyst at Hargreaves Lansdown, said.
A Deliveroo scooter driver takes a break between deliveries in London, great Britain June 8, 2018. REUTERS/Simon Dawson
Doug Gurr, Amazon UK country manager, said Deliveroo is an innovative company in the U. S group was excited to see what it did next.
Amazon currently sells food in Britain by the Amazon Fresh, Amazon Pantry and Amazon Prime Now services, and has a wholesale deal with supermarket Morrisons. But according to market researchers Kantar Worldpanel, the UK groceries market share is still less than 1 percent.
It is, rather, tried and failed to run a restaurant delivery service in great Britain.
Reporting by Kate Holton in London and Ismail Shakil in Bengaluru; Editing by Keith Weir, Georgina Prodhan and Mark Potter