Amazon has recently invested approximately $575 million dollars in Deliveroo, a British company that allows users to order food deliveries from various different restaurants through use of an app. Thanks to Amazon’s investment, Deliveroo’s total raised funding to around one and half billion dollars. It has rivals in the form of UK companies Just Eat and Uber Eats, but Deliveroo operates in around fourteen different countries, including Hong Kong and Germany.
Of course, what’s really important about this isn’t Deliveroo itself, but Amazon’s impact on the market just due to its own force of presence. The stocks of those aforementioned rivals fell just from the announcement that Amazon was entering the market and backing one of their competitors. All of that Amazon investment money hasn’t even actually done anything yet, but the effect is still there, all the same as it was when for Walmart and other retail stores when Amazon announced its one day delivery plan.
The fact of the matter is, Amazon is such a huge, powerful, influential company that its mere presence on the market leaves all who oppose it suffering. Amazon itself doesn’t even have to do anything other than commit some funds. It’s obvious that Amazon is trying to breach the food delivery market a second time, as this isn’t their first; the first attempt in the UK was called Amazon Restaurants, and it flopped last year thanks to competition from Just Eat and Uber Eats.
This time, Amazon is likely trying to get back in the market by backing an already established player like Deliveroo, and that backing has definitely done some serious damage to the competition. Just Eat’s stock fell by 8%, and Uber Eats fell by 2%. Again, this was just due to the announcement that Amazon had invested some money into Deliveroo. The funding hadn’t even been used for anything yet.
Some people think this is a direct shot at Uber, the premiere food delivery company in the world. And while that might be the case, ultimately it doesn’t really seem to matter. Whatever market Amazon goes into, everyone else in that market inevitably suffers to some extent. While it may be some time before Amazon has enough of a foothold to dethrone Uber as the food delivery king, there’s no denying that they have the means to do so. As one of the most financially valued companies in the world at $940 billion, Amazon has more than enough money to make a claim in any market and push their foothold to absolute supremacy.
It raises some serious questions; just how many markets is Amazon going to get involved with? And how many of them is it going to completely dominate? History shows that monopolies are rarely good for a growing and evolving economy, and Amazon already has some markets by the throat as it is. If they continue to plant their flag in every market they can, it’ll only be a matter of time before it’s easier to count places where Amazon isn’t rather than where it is.