Amazon has announced an investment in UK-based food delivery courier service Deliveroo. The on-demand delivery firm is raising USD575 million or GBP450 million from various investors, of which Amazon leads alongside T Rowe Price, Fidelity Management & Research Company, and Greenoaks.

Deliveroo plans to use to the funds to enhance its UK tech team, explore new formats and for international expansion beyond its existing 14 operational markets. The move is expected to signal a redoubling of Amazon's efforts to win in the fast-growing on-demand foodservice delivery space and has the potential to add an additional fulfilment lever to its existing portfolio.

Kantar Point of View

  • The on-demand food retail economy is heating-up. Amazon’s foray into this space, Amazon Restaurants, was scrapped in 2016, in part due to competition from Deliveroo. Given that Deliveroo is essentially a technology business, this is a logical investment for Amazon, as it fits well with their ecosystem, and has the potential to consolidate food delivery capabilities – including Amazon Fresh, into their speedy fulfilment solution, Prime Now.
  • We’re likely to see the two parties leverage their respective capabilities with data, logistics, and in creating consumer-focused experiences, to profitably scale the on-demand model. This could see Deliveroo and Amazon creating a super-app, an all-encompassing on-demand, retail as a service, ecosystem in the palm of consumers’ hands. Then again, Amazon might just be getting a taste of Deliveroo before making a full acquisition. Either way, it means FMCG brands will need new solutions to cater for these distinct on-demand shopper missions.

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