Amazon Invests In Food-Delivery Startup Deliveroo; Uber Shares Dip

Shares of Uber Technologies Inc UBER dipped more than 2.5 percent Friday morning after Amazon.com, Inc. AMZN bought a stake in U.K.-based food delivery company Deliveroo.

What Happened

Deliveroo is an online food delivery company with a presence mostly across Europe and said in a press release Amazon is leading a new $575 million Series G funding round. The company said it will use the proceeds to expand its core message of "bringing customers the food they want whenever and wherever they want it."

"This is great news for the tech and restaurant sectors, and it will help to create jobs in all of the countries in which we operate," Will Shu, founder and CEO of Deliveroo, said in the press release.

Why It's Important

Amazon closed its London operations of Amazon Restaurants in 2018 due to heavy competition from Deliveroo, Uber Eats and others. But the e-commerce giant has plenty of reason to want exposure to app-based food delivery options for several reasons, according to Bloomberg columnist Alex Webb:

• Deliveroo already manages a network of couriers who could also be paid to deliver Amazon Prime items.
• Deliveroo's "dark kitchens" (facilities that aren't attached to a physical restaurant) could also serve as a last-mile fulfillment center for Amazon.
• Deliveroo's end-customer is similar to Whole Foods' customer base.

What's Next

Amazon could be looking at its investment in Deliveroo as a trial run before considering an outright acquisition, Webb wrote. Deliveroo, like Uber, remains unprofitable and a tie-up with Amazon could help ease profitability concerns.

Uber traded around $41.97 per share Friday morning, down 2.4 percent.

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Photo courtesy of Deliveroo.