Amazon is shutting down its food delivery business Amazon Restaurants in the United States, ending a four-year venture that attempted to rival Grubhub but lacked momentum.Does Amazon Own Grubhub? keep reading.
Renowned online food service company Grubhub (GRUB) is for acquisition. Grubhub is weighing a variety of business alternatives, including selling itself to a major company, in the face of increasing rivalry and extensive advertising expenditure squeezing profitability.
Even though Amazon recently shuttered its own U.S. meal delivery business, Amazon Restaurants, rumors have surfaced that the digital juggernaut may be interested in Grubhub. So, no! Amazon does not own Grubhub yet.
Amazon Meal Service
The Amazon meal delivery service was a flop. However, experts say it’s simply another example of the firm’s lengthy tradition of failed trials, which are a secondary consequence of its ambitious approach to development, and it’s doubtful to prevent it from fighting in the area.
After shutting down the business in the United Kingdom, the corporation led a $575 million investment for service giant Deliveroo. Experts anticipate it to take a comparable interest in a big U.S. player once it quits operations in the country, forecasting a distribution future built on properly placed assets.
Why Is Amazon Not Taking Over Grubhub?
The meal service battles are gaining steam, and Amazon, the corporation known for revolutionizing and conquering new businesses like cloud and e-commerce, has backed out of the battle, shocking the globe. Amazon Kitchens, Amazon’s meal delivery service, shut operations in the United States in late June after failing to gain momentum versus larger and quicker competitors. It was a squandered chance to increase Amazon’s share price.
Yet that is not the end of Amazon’s fight in online food warfare. Rather, Amazon is taking a different approach to the market, focusing on purchases and expenditures. Amazon has recently led a fundraising round in UK distribution firm Deliveroo, and speculations have circulated that Amazon is interested in buying Uber Eats in Indian territory.
Will It Be Beneficial For Amazon To Take Over Grubhub?
It’s convenient to have delivery locations in the United Kingdom and India. However, it isn’t crucial. The United States is the cookie jar in the worldwide meal service sector. Amazon still has no footprint in that key industry as of now. That is why GrubHub should be purchased by Amazon. GrubHub is the leading company in meal delivery in the United States.
Certainly, competitive pressure from DoorDash, Uber Eats, and others has weakened that leading position in recent years. However, the firm is still developing rapidly and is still extremely huge, and Amazon has all of the resources necessary to correct GrubHub’s share loss issues and transform the network into the overall king in US meal delivery.
Since GRUB shares have been so low, Amazon may be able to start controlling the US meal delivery sector at a low cost.
The Single Most Important Reason Why Amazon Should Purchase GrubHub
The most compelling rationale for Amazon to acquire GrubHub is because it possesses all of the tools required to eliminate GrubHub’s market erosion problems and transform an Amazon-integrated GrubHub into the leading force in U.S. meal delivery.
The rationale is straightforward. Research backs up a common sense and sensible assessment of the meal delivery sector in the United States: there is no client commitment. Based on the site, client loyalty rates range from 30 percent to 60 percent. That’s very poor.
The shortage of customer retention is because of the lack of unique food supplier relationships; the only thing that distinguishes these sites is their pricing. The price varies drastically. As a result, users are moving from application to application searching for the best deal, causing GrubHub to devolve from the undisputed top seller to simply another huge distribution platform.
GrubHub’s acquisition by Amazon would restore GrubHub’s position as the undisputed top seller. GrubHub is absorbed into the Amazon network.
Assuming GrubHub has been purchased by Amazon. Amazon Prime now includes GrubHub. GrubHub now offers Premium customers free delivery or reduced rates on all purchases. Prime customers will come to GrubHub in massive numbers from other sites, and they will stay as long as they can receive free delivery or reduced costs. Because nearly every American customer has Amazon Prime, GrubHub’s customer base will increase significantly.
Ultimately, Amazon may make GrubHub the undisputed leading company in U.S. meal delivery by merging its massive Prime network with GrubHub’s highest rank.
Conclusion
This transaction should go through. GrubHub should be purchased by Amazon. They have all of the resources they need to convert the failing GrubHub system into the grocery delivery version of Amazon.com.
It makes even more sense now, given that the U.S. meal delivery business is expected to expand to $30 billion in the near term, is already growing at 45 percent year over year, and GrubHub is dealing at a multi-year low market worth of under $seven billion.
