Amazon AMZN Prime members will be eligible to get a year of free Grubhub Plus or unlimited free food delivery.
The 2% stake in Grubhub TKWY.AS will be purchased by Amazon along with its fast, free delivery and owner of Whole Foods. Adam DeWitt, CEO of Grubhub, said he is confident that the offering will expose many new diners to the value of Grubhub while driving more business to our restaurant partners and drivers. In order to maintain both customers and companies, Fox says Grubhub needs to leverage and provide value for both customers and merchants, as there is growing competition for market share from Uber UBER and DoorDash DASH Re-introducing them to Grubhub is important. He says that Grubhub is critical because it will be a part of Amazon. He said that adding on new categories, such as groceries, could help, especially with the chance to create synergies with the Whole Foods brand, which Whole Foods acquired back in 2017.
An opportunity to work with merchants.
He said that the partnership with Grubhub could give Amazon an opportunity to change the narrative of bulldozing smaller companies.
It's important to keep in mind that DoorDash, especially DoorDash and Uber, is able to create value for merchants in a big way, including small merchants, where sometimes Amazon bulldozes those types of companies, Fox explained.
There is a lot of room for growth with the online food delivery space expected to reach $343.80 billion in 2022 and the total category penetration still relatively small, with Grubhub currently serving more than 320,000 restaurant partners in over 4,000 U.S. cities. Fox believes that Grubhub can benefit from services around analytics, web services and white-label delivery to expand beyond its four walls, with the possibility of expanding into convenience store offerings beyond its partnership with 7-11.
That kind of technology investment is something that Amazon would have to ramp up and have the frame of mind to do that for their merchants in a bigger way. Follow her on Twitter at BrookeDiPalma or email her at bdipalma yahoofinance.com.