#327 Amazon’s Deliveroo Investment & USA Monthly Storage fee discount (Amazon News) - a podcast by Michael Veazey

Amazon's Deliveroo Investment Puts Amazon in Competition With Uber and Just Eat UK

Amazon's Deliveroo investment, representing its latest push into the UK food delivery market,  was facing mounting opposition this week as critics of a $575m deal with Deliveroo voiced concerns about the control it will exercise over the UK business.

The food delivery company Deliveroo announced its deal with Amazon on Friday. Saying that Jeff Bezos’ e-commerce empire was the lead investor in a giant $575m (£450m) funding round, taking the total amount of cash raised by the business to $1.53 billion.

The announcement of the Amazon Deliveroo investment sent shares in rival online food delivery companies such as Just Eat and Takeaway.com falling fast.



Deliveroo to use Amazon's investment for Technology

The UK delivery company said it would use the cash injection to “invest heavily” in its technology. Deliveroo company founder Will Shu claimed he looks forward to working with Amazon,  which he described as a “customer-obsessed organisation”.



Amazon’s own Food delivery failures

Amazon's investment in Deliveroo comes on the back of Amazon pulling back on its own restaurant delivery business in the UK. It closed the London arm of the service in December last year.

Amazon shut the doors to its own food delivery business Amazon Restaurants in the UK in 2018 - after just two years. Amazon Restaurants had struggled in a highly competitive market dominated by the likes of Just Eat, Deliveroo and Uber Eats, all of which deliver food to consumers who make orders through smartphone apps.



Deliveroo's Synergy with Amazon fulfilment

The Deliveroo investment may have been driven by the appeal of a network of couriers to Amazon for logistical and staff loyalty reasons.

Delivery staff are usually paid for each completed delivery.   If Amazon can ensure that the people making their deliveries have little or no downtime, then delivery staff can make more money and are therefore less likely to go and work for a rival.

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 to help Amazon logistics with “Dark kitchens”  

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 centres for Amazon.  Deliveroo plans to use many of the proceeds from the latest fundraising to open new sites.



Political Controversy over Amazon Deliveroo Deal

Amazon's Deliveroo investment provoked immediate controversy from politician Tom Watson MP, deputy leader of the Labour Party the main Opposition party in the UK. Watson demanded an investigation by the UK’s competition watchdog into Amazon’s ploy to get its “mighty claws” on more consumer data.

“Amazon is obsessed with tracking tools, micro-targeted ads, extracting billions through monetising our personal data,” Watson said. “They want Deliveroo's tech and data… They want to know how best to extract your cash throughout your waking and sleeping hours.”



Market Sceptical over Amazon deal with Deliveroo 

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