Amazon has announced a significant enhancement for its U.S. customers: the ability to order food delivery directly within the Amazon app through Grubhub. This new feature is a strategic expansion of Amazon's offerings, aiming to provide more value and convenience to its users.
Why It Matters
This integration marks a notable shift in Amazon's service capabilities, as it is the first time the company has enabled third-party restaurant ordering within its app. Jamil Ghani, Amazon Prime's Worldwide VP, emphasized, "It's the first time we've had third-party restaurant ordering inside the Amazon app."
Details of the Integration
The partnership with Grubhub enhances Amazon's ecosystem, making Grubhub+ memberships a permanent benefit for Prime subscribers.
- User Experience: Any Amazon user can search for "Grubhub" within the Amazon app to place, track, and manage food orders seamlessly, similar to the experience on the Grubhub app.
- Prime Benefits: Amazon Prime members can activate Grubhub+ for free, unlocking perks such as free delivery on orders over $12, 5% credit on pickup orders, and other discounts. Typically, a Grubhub+ subscription costs $120 annually.
The Broader Impact
The integration aims to bolster both companies' subscription services, driving increased consumer spending during a time of economic caution.
- Amazon's Strategy: As Amazon prepares for its July Prime Day sales event, it seeks to reinforce the value of its Prime membership. Competitors like Walmart are simultaneously enhancing their own subscription services.
- Grubhub's Growth: Embedding Grubhub within Amazon's platform is expected to increase the usage of Grubhub's services, potentially challenging DoorDash's market dominance.
Insights from Leaders
Grubhub CEO Howard Migdal commented, "This partnership gives us scale," indicating that the collaboration could lead to cost efficiencies that benefit both customers and restaurants.
Background
This partnership builds on an agreement initiated nearly two years ago, allowing Amazon to offer food delivery and Grubhub to expand its customer base through Amazon's vast network.
Market Context
Despite its integration with Amazon, Grubhub remains smaller compared to its competitors.
- Market Share: DoorDash and Caviar dominate the U.S. market with 67% of deliveries, followed by Uber Eats and Postmates at 25%. Grubhub and its subsidiaries account for 8%.
- Global Reach: DoorDash operates in over 25 countries with 500,000 merchants and 2 million couriers. Uber boasts 7.1 million drivers and couriers worldwide. Grubhub supports 375,000 businesses in the U.S. and employs nearly 200,000 drivers.
Looking Ahead
As inflation continues to affect consumer behaviour, customers are still ordering food for delivery, although often with fewer items per order to save money. The impact of integration on consumer habits and market share will be closely observed.
Privacy Considerations
Customers can opt to link their Grubhub account with their Amazon account, allowing Grubhub access to their Amazon profile information (name, email, and Prime status). However, Grubhub will not see details about other Amazon orders, and Amazon will only access information about Grubhub orders placed through its platform for agreed purposes.
This strategic partnership between Amazon and Grubhub is set to enhance consumer convenience and integration, potentially reshaping the competitive landscape of the food delivery market.