Amazon's $139-per-year Prime membership now includes free access to food delivery company Grubhub's subscription service in the U.S., with the option to order directly from Amazon's app. Amazon stock was slightly lower Thursday as the tech giant announced the expanded offering. Shares of Grubhub's larger competitor, DoorDash were also slightly lower in early trading.
Grubhub+ includes $0 delivery fees on eligible orders above $12, reduced service fees and exclusive rewards and deals. The membership typically costs $120 per year directly through Grubhub. Amazon Prime members can order from Grubhub directly on the Amazon app and website.
The tie-up marks an expansion of a 2022 partnership between Amazon and Grubhub's Amsterdam-based parent company, Just Eat Takeaway. The previous deal included one-year of Grubhub+ for Amazon Prime members.
Jamil Ghani, vice president of Amazon Prime, told Yahoo Finance that the expanded Grubhub deal helps "really round out, in one simple membership, all the needs and wants of busy households across the United States."
Amazon Stock: Moving Back Into Food Delivery
Amazon attempted a meal delivery business nearly a decade ago with Amazon Restaurants. But the company shut down the effort in 2019, focusing instead on grocery delivery.
In the previous deal, Amazon acquired the rights to buy a 2% stake in Grubhub. Just Eat Takeaway announced in a separate news release Thursday that Amazon has received warrants representing 4% of Grubhub's equity and could receive a further 10% based on certain conditions.
Just Eat Takeaway acquired Grubhub in 2020 in an all-stock deal valued at $7.3 billion.
There were roughly 180 million Amazon Prime members in the U.S. as of March 2024, according to research firm Consumer Intelligence Research Partners.
Grubhub has fallen behind in the U.S. restaurant delivery market. Just 8% of all U.S. meal delivery sales were placed on Grubhub as of March, according to estimates from Bloomberg Second Measure. DoorDash is the U.S. leader with 67% of U.S. meal delivery sales, according to Second Measure estimates. Uber captured an estimated 25% of meal delivery sales in March.
Amazon-Grubhub Deal Impact For Uber And DoorDash
Analysts will be watching for whether the deal is enough to shake loose more customers for Grubhub.
"After the 2022 (Grubhub+) deal for Prime members was announced, we recall Uber reported seeing virtually no competitive impact while (DoorDash) saw a small hit to downloads for about a week followed by reversion," wrote RBC capital analyst Brad Erickson in a client note Thursday. "We would think this probably plays out similarly but worth monitoring given the obvious muscle that fuller Amazon distribution brings."
On the stock market today, Amazon stock is down 1.3% at 179.60 in recent action. Meanwhile, DoorDash was down 1% at 110. Uber stock was flat at 64.92 at last check.
