Amazon Seeks a Re-entry into Restaurant Deliveries | TechTree.com

Amazon Seeks a Re-entry into Restaurant Deliveries

The company had started home deliveries during the post-pandemic period in 2020 and then silently put the idea to rest, given its inability to take on delivery-only competitors

 

What's with Amazon and its never-ending desire to enter food delivery? Having once attempted and failed in 2019, the company came back with another option during the pandemic period in India, only to quickly retreat once again. Now, the company is trying another tack - offering free subscriptions to a food ordering platform as a lure to its Prime customers. 

Maybe, the company is taking the cues from food delivery apps such as Swiggy and Zomato which offer sneak peeks into upcoming shows on OTT platforms while "one is waiting for one's order to arrive." The latest move by Amazon involves tying up with Grubhub in the US to offer its services free to Amazon Prime members for a year. 

Will Amazon come calling?

Does this mean Swiggy and Zomato should be concerned? Or would they welcome Amazon into such an agreement? As per the deal in the US, the eCommerce giant got into an investment and partnership with Just Eat Takeaway (owners of Grubhub) under which the former will potentially acquire equity stake in the latter. 

The deal itself makes for quite an interesting read. For starters, it gives Amazon a stake in JET, as the company calls itself, but more specifically there's a annual deal renewal provision as well as one where an Amazon subsidiary will receive warrants over 2% of Grubhub's fully diluted common equity. Who said anything about having one's cake and eating it too? 

That's not all, the deal also gives Amazon warrants over up to a further 13% of Grubhub's fully diluted common equity, which could be vested only subject to certain performance criteria. In other words, it depends on how many new consumers get delivered through this agreement. 

If one were to look at Grubhub's numbers as of December 2021, its gross assets stood at $6.7 billion with losses prior to tax over a 12-month period stood at around $400 million. In other words we could surmise that the first set of warrants could be worth around $130 million and the performance-based ones at over $800 million. 


TAGS: Amazon, Food Delivery, Food Delivery Apps

 
News Corner
IMP IMP IMP
##