Just Eat Takeaway.com (GRUB) – Get Grubhub, Inc. Report shares slumped lower Wednesday after Amazon announced a partnership that will provide free food delivery for Prime members in the U.K. in a move that could also add pressure to rivals such as DoorDash (DASH) – Get DoorDash Report and Uber Eats (UBER) – Get Uber Technologies, Inc. Report.
Amazon is offering a free year of delivery service Deliveroo Plus with its Prime subscription. Prime members will be able to access the silver tier of Deliveroo Plus free of charge, which gives users free deliveries on orders over £25. Deliveroo normally charges £3.49 for the service, which translates to 12 month savings of over £40 per year for Prime members.
Amazon first invested in Deliveroo more than two years ago, leading a $575 million funding round in the startup. The U.K.’s competition and Market Authority had some reservations about the deal before clearing it last year amid the COVID-19 pandemic.
Amazon stepping into the food delivery space in the U.K. could be a precursor to similar moves in other locales, which would pressure other food delivery companies.