- Deliveroo has raised $575 million in a recent round of funding let by Amazon with contributions from T. Rowe Price Group and Fidelity Management and Research, The Wall Street Journal reports.
- The exact investment amount from Amazon was not disclosed by Amazon or Deliveroo.
- The third-party delivery company, which is projected to be worth $3 billion to $4 billion, has now raised over $1.5 billion.
Amazon's investment in Deliveroo is an interesting one, especially since the company shuttered its own food delivery service, Amazon Restaurants, in London last year. However, its investment in Deliveroo is within the company's strategy to expand overseas either by buying or joining forces with local companies, according to The Wall Street Journal. Its investment could also mean that it still believes in the value of the U.K. delivery market and wants to get a piece of the action.
For Deliveroo, this investment will further entrench it as one of the top delivery services in the U.K., its most profitable market, and potentially allow it to add to its growing list of services. The company is already rolling out a click-and-collect option by the end of the year. It also has been expanding its virtual kitchen footprint and now has 215 kitchens available for restaurants to use, according to The Wall Street Journal. The company also added perks for drivers, offering electric scooter rentals and professional skills training.
This new funding could be bad news for Uber Eats, which has been expanding within Britain and recently adjusted its fees in the U.K. and Ireland. This also negatively impacts Just Eat, which has been under pressure from activist investors to grow revenue faster. Shares of both Just Eat and another competitor, Delivery Hero SE, were already down Friday following this news.
How competition shakes up in the U.K. could provide a preview for the future of delivery in the U.S., where companies are still expanding and entering new markets. Food delivery in the U.K. was worth $5 billion in February 2018 and could grow as much as 17% by 2020, according to the NPD Group. Analysts have previously told Restaurant Dive that consolidation and pricing changes, which have already started happening in the U.K., are to be expected within the U.S. market in the coming years.