Amazon powers up Deliveroo to eat into global fastfood deliveries – The Wall Street Journal

EDINBURGH — Deliveroo cyclists, huffing and puffing, up steep streets with big bags of food on their backs are a common feature in the Old Town where I live. Delivering pizza and Indian take-aways looks like a job that's gruelling physical work for only the fittest in their prime. It turns out that Amazon, which is constantly coming up with ways to scale up its revenues, thinks that Deliveroo's energetic riders can help fuel its bottom line. Amazon has injected huge sums into the company in the expectation that it can grab market share from Uber Eats and others in the fast-food home delivery sector. Although Deliveroo takes a large slice of commission from restaurants for its service, and also levies a fee on hungry customers, it isn't a profitable business – yet. Investors in Deliveroo rivals are clearly concerned that Amazon will make things tougher in the sector, with Just Eat and Delivery Hero losing ground on the news of the Amazon investment. Amazon is in the BizNews portfolio. – Jackie Cameron.Amazon invests in UK food-delivery startup Deliveroo.By Parmy Olson.___STEADY_PAYWALL___.LONDON — Amazon.com Inc. is investing in British food-delivery company Deliveroo, becoming one of the startup's biggest investors and giving it additional firepower against Uber Technologies Inc.'s Uber Eats service in the battle to meet growing consumer demand for delivered meals.Deliveroo, whose delivery bikes are almost as common a sight on the streets of London as the capital's black cabs and double-decker buses, competes with Uber Eats and other services in the UK and 13 additional markets.Deliveroo said Friday it raised $575m in a recent funding round, led by Amazon. Investment firms T. Rowe Price Group Inc. and Fidelity Management and Research Co. also contributed funding, Deliveroo said. Amazon and Deliveroo didn't disclose the e-commerce giant's specific contribution.The food-delivery startup said the fundraising brings the total amount of money it has raised to $1.53bn. It didn't disclose a valuation. Deliveroo was valued at $1.9bn during its previous funding round in September 2017, when it raised $482m, a spokesman said.Deliveroo's Chief Executive William Shu co-founded the company in 2013 after working as an investment banking analyst for Morgan Stanley in London. Mr. Shu worked as one of the company's first delivery drivers for months to learn how to plan the most efficient routes. The service launched in London in summer 2013, three years before Uber Eats launched in the UK capital.Deliveroo makes money by charging restaurants a commission of roughly 10% to 20%, while customers also pay the company a flat fee of around £3 ($3.80) per order. Deliveroo isn't profitable globally but is in London and other UK cities where it has been present the longest, a spokesman said. It also operates in various markets across Europe, Asia-Pacific and parts of the Middle East."We're impressed with Deliveroo's approach," said Doug Gurr, Amazon UK's country manager, adding "we're excited to see what they do next."Deliveroo, which has no presence in the U.S., said it would use the new money to grow its engineering team in London and expand further into markets where it already has operations.Shares in rival food-delivery companies, including Just Eat PLC and Delivery Hero SE, fell in early trading Friday.Deliveroo's original model involved dispatching delivery drivers to restaurants who didn't have their own takeout service. In recent years it has expanded by setting up its own kitchens where restaurant-operators can cook food for delivery. It now has 215 such kitchens. Deliveroo works with about 80,000 restaurant and takeout outlets across Europe, the Middle East and Asia Pacific.In Singapore, the company has experimented with expanding its kitchen service to allow customers to dine in an area where several of Deliveroo's restaurant partners serve food under one roof. Customers can order through the Deliveroo app.For Amazon, the investment marks the retailing giant's latest overseas bet.Amazon has long been expanding overseas, building revenue for its global online shopping platform, but also buying or joining with foreign local firms. The Wall Street Journal reported earlier this year, Amazon is in talks to merge its e-commerce business for goods imported into China with a Chinese competitor, NetEase Inc.'s Kaola. In 2004, it bought Joyo.com, at the time the China's biggest online vendor for books, video and music. In 2017, Amazon bought Dubai-based Souq.com for $580m.Deliveroo said the investment from Amazon would be completed in the coming months, following regulatory approvals.

Amazon powers up Deliveroo to eat into global fastfood deliveries – The Wall Street Journal

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