LONDON – Amazon announced Wednesday its first major tie up with U.K. food delivery firm Deliveroo since it invested in the company two years ago, offering Prime customers free delivery on takeout orders over a certain amount for a year.
Millions of Amazon Prime members in the U.K. and Ireland will get access to the lower tier of the Deliveroo Plus service, meaning they’ll be eligible for free deliveries when their orders exceed £25 ($34) in value.
The partnership comes after regulators at the Competition and Markets Authority investigated Amazon’s investment in Deliveroo to see if it presented any competition concerns.
Amazon’s investment was ultimately approved after regulators concluded the deal didn’t present any significant competition concerns and that Deliveroo would struggle to survive without the investment.
It gave the e-commerce giant a 16% stake in Deliveroo, which is led by former Morgan Stanley banker Will Shu.
Amazon has 200 million Prime subscribers worldwide and an undisclosed amount in the U.K. and Ireland.
Deliveroo declined to share whether Amazon has paid it an additional fee for the benefit of being able to offer Prime members access to the “silver” level Deliveroo Plus, which normally costs £3.49 a month.
In May 2019, Deliveroo announced it had raised a $575 million funding round led by Amazon. Just two months later, the CMA put the brakes on the deal. Then, later in the year, the CMA launched a formal probe to examine potential anti-competitive implications.
When it began its investigation, one of the CMA’s main concerns was the potential for the deal to prevent Amazon from re-entering the online restaurant food market. Amazon had previously operated an online takeout business called Amazon Restaurants but subsequently exited the market in 2019.
Disastrous IPO
Deliveroo listed on the London Stock Exchange in April with a market value of roughly £7.5 billion. But shares tanked by around 25% on the opening day of trade. Shares have recovered somewhat since then and the company’s market cap now sits at £8.6 billion.
Amazon sold around £100 million worth of Deliveroo shares when the company went public, reducing its stake from 16% to around 12%. However, the e-commerce giant remains its biggest shareholder.
Lisa Leung, director of Prime and marketing at Amazon U.K., said in a statement: “We’re always looking for ways to offer even more value to Prime members giving them the best of shopping and entertainment.”
She added: “That is why we are excited for this offer with Deliveroo — so millions of Prime members in the UK and Ireland can get the convenience of great meals delivered fast.”
