LONDON – Amazon on Wednesday announced its first major link with UK food delivery firm Deliveroo since it invested in the company two years ago, offering Prime customers free delivery on food orders for a certain amount for a year.
Millions of Amazon Prime members in the UK and Ireland will get access to the lower level of Deliveroo Plus service, meaning they will be eligible for free shipping when their orders exceed £ 25 ($ 34) in value.
The partnership comes after regulators from the Competition and Markets Authority investigated Amazon’s investment in Deliveroo to see if it had competition issues.
Amazon’s investment was finally approved after regulators concluded that the deal did not present significant competition issues and that Deliveroo would struggle to survive without the investment.
It gave e-commerce giant a 16% stake in Deliveroo, led by former Morgan banker Stanley Will Shu.
Amazon has 200 million Prime subscribers worldwide and an undisclosed amount in the UK and Ireland.
Deliveroo declined to share whether Amazon has paid an additional fee for the benefit of being able to offer Prime members access to the “silver” Deliveroo Plus level, which typically costs £ 3.49 a month.
In May 2019, Deliveroo announced that it had raised a $ 575 million funding round led by Amazon. Only two months later, the CMA halted the deal. Then, later in the year, the CMA launched a formal investigation to examine possible anti-competitive implications.
When it began its research, one of the CMA’s main concerns was the potential of the deal to prevent Amazon from re-entering the online restaurant food market. Amazon had previously operated an online takeaway business called Amazon Restaurants, but later went off the market in 2019..
Disastrous IPO
Deliveroo is listed on the London Stock Exchange in April with a market value of approximately £ 7.5 billion. But shares closed at around 25% on the first trading day. Shares have recovered somewhat since then and the company’s market capitalization now stands at £ 8.6 billion.
Amazon sold Deliveroo shares worth £ 100 million when the company went public, reducing its stake from 16% to around 12%. Still, the e-commerce giant remains its main shareholder.
Lisa Leung, director of Prime and marketing at Amazon UK, said in a statement: “We are always looking for ways to offer even more value to Prime members by giving them the best in shopping and entertainment.”
He added: “That’s why we’re thrilled with this offer with Deliveroo, so that millions of Prime members in the UK and Ireland can get the convenience of excellent food delivered quickly.”