Amazon is leading a £475 million funding round for Deliveroo, the British restaurant delivery giant, as the London restaurant delivery market continues to demonstrate significant financial muscle. It also comes off the back of Amazon’s decision last November to cease operating its U.K. restaurant delivery arm.
Deliveroo has released a statement which details American retail giant, Amazon, as the largest investor in Deliveroo’s Series G funding round. The total monies raised by Deliveroo now stands at $1.53 billion (£1.2 billion.)
The delivery company says it will now “invest heavily in expanding the company’s tech team” at its U.K. Headquarters in the City of London, “expand further” to reach new customers, and continue innovating through its delivery-only “super” (nee dark) kitchens known as “Deliveroo Editions,” an area which has grown much more modestly than forecast in 2017.
Having secured these monies, Deliveroo offered little by way of detail on how it plans to grow. But did say it “will continue to build its world-class service — bringing customers the food they want whenever and wherever they want it, offering even more work for riders, and helping restaurants to grow their businesses by reaching new customers.” It is also thought that is a statement of intent from Deliveroo to its principal competitors, Uber Eats and Just Eat. The reported acquisition of Deliveroo by the former appears to have been little more than rumourmongering among speculative investors.
Deliveroo’s proposed pivot to AI and robots looks to have been shelved for the time being, though it remains to be seen how this model — at least without one constituent: rider, restaurant, or delivery platform being severely compromised — is viable in the long-term.
Former Eater contributor Soheb Panja, who has written about Deliveroo extensively, noted the timing of the investment. “Interesting Amazon pulled out of food delivery last year,” he said. “The Deliveroo deal suggests Amazon still believes in the strategic value of food delivery as a long term business, but didn’t see it worthwhile slugging it with Uber/Deliveroo to get scale. The three of them battling away would have meant a brutal price/commission battle.”
Will Shu, founder and chief executive of Deliveroo, said: “This new investment will help Deliveroo to grow and to offer customers even more choice, tailored to their personal tastes, offer restaurants greater opportunities to grow and expand their businesses, and to create more flexible, well-paid work for riders.
“Amazon has been an inspiration to me personally and to the company, and we look forward to working with such a customer-obsessed organisation.
“This is great news for the tech and restaurant sectors, and it will help to create jobs in all of the countries in which we operate.”
Amazon U.K. country manager Doug Gurr offered an insight into why the company felt Deliveroo was likely to return on its investment. “We’re impressed with Deliveroo’s approach, and their dedication to providing customers with an ever increasing selection of great restaurants along with convenient delivery options,” he said. “Will and his team have built an innovative technology and service, and we’re excited to see what they do next.”
Panja added that the challenge for both companies would be to integrate each others’ specialisms and long-term goals. “It is also interesting to imagine what Deliveroo looks like powered by Amazon data and logistics. On the flip side, how much will Deliveroo’s singular focus be compromised by Amazon broader strategy?”
Joseph Evans, a research analyst, quoted by the Financial Times, added: “Deliveroo has found a way to get things to people very quickly in built-up areas [so] that’s something that Amazon will be interested in. If right now they’re carrying pizzas and burgers, why shouldn’t they deliver books?”
So although the focus of this investment will be on Deliveroo’s ability to benefit from Amazon, the online retailer could stand to benefit from the restaurant delivery company’s logistic agility. “Deliveroo riders could enhance the famously difficult so-called ‘last mile’ of Amazon’s logistics,” Panja said.