Three years after giving up its own food delivery service, Amazon is trying a new tactic, taking a stake in US delivery company Grubhub and offering free one-year Grubhub+ memberships as part of a “Prime Day” promotion.
Amazon announced the plan on Wednesday in a deal with European online food delivery marketplace Just Eat Takeaway, which Grubhub acquired in 2021 for $7.3 billion.
Prime members get a Grubhub+ membership worth $9.99. The offer includes free delivery on orders over $12 in the more than 4,000 US cities where Grubhub operates.
Grubhub competes with DoorDash, Uber Eats and others in delivering food to restaurants — a space Amazon vacated in 2019 when it closed Amazon Restaurants.
First launched in Seattle in 2015, Amazon Restaurants expanded to more than 20 US cities and later to London. The service gave Prime members a way to have meals delivered to their door, using the Amazon Restaurants website or via the Prime Now shopping app.
The move to close came less than a month after Amazon led a $575 million round of funding for Deliveroo, a UK-based food delivery company.
In the Just Eat Takeaway (JET) deal, Amazon will receive warrants representing 2% of Grubhub’s shares, and an additional 13% of shares provided the deal brings enough customers for Grubhub, according to JET and a Reuters report.
“Amazon has redefined convenience with Prime, and we believe this offering will introduce many new diners to the value of Grubhub+ while driving more revenue for our restaurant partners and drivers,” said Adam DeWitt, Grubhub CEO, in a statement. declaration.
JET acquired Grubhub in a deal first announced in 2020, as food delivery operations peaked during the height of the COVID-19 pandemic. But since then, JET has been investigating a partial or full sale of Grubhub, which it said Wednesday it was continuing to actively investigate.
Edward Jones analyst Brian Yarbrough told GeekWire that the deal will only bolster Amazon’s range of Prime offerings and get ahead of competitors.
“Prime membership renewal rates are already above 90%, but we believe additional offerings such as food delivery strengthen the platform and increase consumer loyalty to Prime,” Yarbrough said. “Overall, we believe this is another offering for Prime membership that should help drive long-term growth and customer loyalty.”
DoorDash shares fell more than 7% after the Amazon/Grubhub news on Wednesday.