On Wednesday, Amazon.com, Inc. (NASDAQ: AMZN) made an important and exclusive announcement about their major tie-up with Deliveroo PLC (OTCMKTS: DROOF). The e-commerce giant plans on giving free takeout delivery for Prime customers in the UK and Ireland for a year. This is the first big tie-up Amazon makes with Deliveroo, run by Will Shu, a former banker since their two years investment in the company.
The free deliveries will be applicable for orders over €25 ($34). The UK and Ireland have millions of Amazon Prime subscribers; now, they can access the Deliveroo plus service for free.
The significant partnership was approved only after CMA’s (Competition & Market Authority) investigation into the competition crisis on Amazon’s involvement with Deliveroo. The CMA regulators approved and convinced that Amazon’s investment will not cause any competition crisis, and Deliveroo will also struggle without the e-commerce giant’s investment.
It gave a 16% stake to the King of e-commerce. Amazon is one of the top e-commerce platforms, which has over 200 million Prime subscribers worldwide and an undisclosed large number of subscribers in Ireland and the UK.
Deliveroo refused to comment on whether Amazon paid additional costs to serve their Prime customers with Deliveroo Plus. This “silver” level option usually costs €3.49/month.
Will Amazon Re-Enter Food Market
Back in May 2019, Deliveroo raised $575 million in a funding round led by Amazon. However, after two months, CMA decelerated the deal, and later that year, they started to investigate the anti-competitive indication.
The primary reason behind this investigation was that CMA wants to prevent Amazon from again entering the Online Food Market. Previously the e-commerce giant had run an Online Delivery business named Amazon Restaurants, but in 2019, they exited the business market.
In April, the London Stock Exchange-listed Deliveroo with a market worth of €7.5 billion. Unfortunately, on the opening day of trade, shares failed around 25%. However, stocks have recovered since then, and now it stands at €8.6 billion.
Amazon sold over $100 million valued Deliveroo stakes which now reduces their stakes to 12%. However, Amazon is still the biggest shareholder of Deliveroo. Prime and Marketing director Amazon UK Lisa Liung said they are looking for all possible offers to give extra value to their prime customers.
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