AMAZON OFFERS FEE-FREE FOOD TO PRIME MEMBERS FOR A YEAR
A new deal has been done between Amazon.com and Just Eat Takeaway.com ‘s Grubhub by taking some equity percentage in exchange for no-fee food for US Prime members for the rest of the year. Amazon has reserved the right to buy 2% equity in Just Eat Takeaway.com Grubhub to scale subscriptions by delivering food.
The arrangement, which was revealed ahead of Amazon’s July “Prime Day” marketing campaign, which begins on Tuesday, enables Grubhub’s loyalty club members to utilize the online retailer’s services without paying delivery fees on purchases over $12 in more than 4,000 U.S. cities.
Stakes in Just Eat Takeaway make more than 15% to 15.86 Euros in Amsterdam Trading. This is a new bright breakthrough for Just Eat Takeaway the largest food ordering and delivering company of Europe but their stock had dropped from 70% this year.
Investors have asked that it sell or join up with someone for Grubhub, which it paid $5.8 billion for last year. Since the pandemic’s peak, demand has decreased, and Doordash and Uber Eats have gained market share.
In exchange for the arrangement attracting enough customers to Grubhub, Amazon will also obtain warrants worth an additional 2 percent of Grubhub’s shares and an additional 13 percent of shares.
AMAZON HELPS JUST EAT TAKEAWAYS BY TAKING STAKE
Amazon’s stock increased by more than 1%, while shares of Uber and Doordash declined by almost 4% and 7%, respectively. It was stated in a statement by Just Eat Takeaway that the company is still “exploring the partial or complete sale of Grubhub,” but that there is no guarantee that a deal will be struck.
Similar to a collaboration Amazon has in Britain with Just Eat rival Deliveroo, analysts from JPMorgan claimed the Amazon deal would introduce new customers and enhance Grubhub’s standing in the United States.
“While Grubhub is now only a smaller part of Just Eat Takeaway’s portfolio, representing about 20 percent of estimated 2023 revenues, this step improves JET’s position in potentially selling (Grubhub),” analysts wrote.
According to Amazon, there are more than 200 million Prime subscribers worldwide. It raised the annual cost of membership to $139 from $119 in the United States this year and has aimed to show the higher price tag is worth it.
According to analysts, this is a simple and affordable way for Amazon to resume restaurant delivery in the United States after quitting the service in 2019 due to a lack of restaurant supply.
“Our thought is ‘hey, why not?”, analysts at RBC Capital Markets wrote.
The agreement follows a well-worn strategy for Amazon, which has for years bought warrants to purchase stock in food and air transportation companies in an effort to encourage these partners to support the online retailer’s operations without having to fork over cash for a full acquisition.
AMAZON OFFERS FEE-FREE FOOD TO PRIME MEMBERS FOR A YEAR
According to Just Eat Takeaway, the deal is anticipated to increase Grubhub+ membership while having a little effect on Grubhub’s financial performance in 2022 and a positive one starting in 2023.
At the end of 2021, according to the business, Grubhub’s gross assets were valued at 6.5 billion euros ($6.67 billion), and the same year, it suffered a pretax loss of 403 million euros. ($1 = 0.9746 euros)
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