Earnings Watch: Will Amazon and GrubHub take a bite out of Uber and DoorDash’s food-delivery dominance?

by | Jul 29, 2022 | Stock Market

Amazon.com Inc. is jumping further into the food-delivery business by teaming up with Grubhub, just as some analysts say they see the pandemic-induced spike in that market slowing. So what does that mean for dominant U.S. delivery companies Uber Technologies Inc. and DoorDash Inc.? Some analysts say the Amazon
-Grubhub partnership, which was announced in early July, may have an incremental effect on the dominance of DoorDash
which leads the U.S. app-based delivery market, and No. 2 Uber Eats
It will depend on how Amazon chooses to market Grubhub, the analysts say.

“We question the visibility this will receive,” analysts from JMP Securities wrote in a note to investors. “Simply put, we would not be surprised to see Grubhub+ lost in the myriad benefits Amazon provides to its subscribers.” Morgan Stanley analysts wrote about a possible upside for Amazon, which has a similar partnership with Deliveroo in the United Kingdom. Amazon’s efforts to promote Grubhub “to Prime members will be important to monitor,” they said. “For context, Deliveroo saw its subscriber base double in the month following the launch of its partnership with [Amazon].” In June, DoorDash had 57% of the U.S. market share, Uber Eats had 32% and Grubhub, which is owned by Dutch company Just Eat Takeaway
had 11%, according to YipitData’s email receipt data. See also: 5 things to know about Amazon Prime’s free Grubhub+ membership offer Besides competitive concerns, there are indications that delivery-app companies are becoming more cost-conscious. DoorDash recently announced that it is raising the minimum order total for its DashPass subscribers who order from convenience stores, drug stores and liquor stores, as well as from the company’s own DashMarts. Meanwhile, Raymond James analysts said their app data trends showed a slowdown in food delivery in the second quarter, as inflation continues to affect consumers. That’s in line with DoorDash, Uber Eats and Grubhub all showing declines in gross food sales from May to June, according to YipitData, and slowdowns tracked by chains such as Chipotle Mexican Grill Inc.
which reported this week “lower delivery fees associated with a lower volume of delivery transac …

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