News May 18, 2019 04:32 PM EDT

Amazon to Launch Deliveroo, A Rival to Uber in Food Delivery

By Sieeka Khan

Amazon is taking a huge step into the restaurant delivery business and they are taking it internationally. Taking inspiration from one of Uber's most successful markets, Amazon launches Deliveroo. The e-commerce giant released a statement on Friday that it would lead a $575 million investment in Deliveroo, which is one of the London-based start-up's biggest backers.

This cash infusion can help strengthen one of the largest rivals to Uber's meal delivery division, UberEats, which the company has identified as one of their most promising businesses. Deliveroo has now raised $1.53 billion with the help of new investment rounds and the existing backers like Fidelity and T.Rowe Price.

Deliveroo was founded in 2013 and has become a familiar sight in Paris, London, and other cities. Though the company began as a restaurant delivery business, it now serves around 80,000 establishments and they are also setting up their own stand-alone kitchens.

They have now expanded beyond Britain to 13 other markets, including France, Hong Kong, Australia, and Kuwait. Their investment offers Amazon and other paths into restaurant delivery after it gave up its own such service in Britain in December. The service was available to Amazon Prime subscribers in parts of London but did not make much of a difference in the face of competition from UberEats and Just Eat.

 "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," Doug Gurr, who manages Amazon's British operations, said in a statement. "We're excited to see what they do next."

With their new capital, Deliveroo plans to hire more programmers and offer more incentives to couriers and restaurants.

"Amazon has been an inspiration to me personally and to the company," Will Shu, Deliveroo's founder and chief executive, said in a statement. "We look forward to working with such a customer-obsessed organization."

This service will put even more pressure on Uber, whose public-market debut last week dented because of concerns that their growth rate was slowing down. Uber has identified growing competition to UberEats, and it is one of the reasons for its declining rate. The cash injections in rivals like DoorDash and Rappi have forced Uber to spend more on UberEats to stablize their market position.

Uber announced they would cut their delivery service in Britain and Ireland in response to their Amazon competition, Deliveroo, and JustEats. Uber held discussions about buying Deliveroo from Amazon last year, but the two companies were not able to get to a fair price.

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