Amazon may seem like an unstoppable behemoth taking over everything from groceries to gizmos, but it seems the delivery giant is not completely immune to failure — especially when it comes to the competitive food delivery market.
Last week, Amazon quietly shuttered its restaurant delivery operations in the U.K., informing customers via email that they would “no longer be able to order from Amazon Restaurants UK after Monday, 3rd December” (hat tip to the Evening Standard). This news comes only two years after Amazon launched the delivery service — available through its £79 ($101) per year Prime Now app — in select areas of London. Amazon guaranteed food delivery within the hour, and originally offered free delivery for orders over £15 ($19 USD) (it later changed that to a £1.99 flat fee for all orders).
Despite its big name and massive reach, it seems Amazon Restaurants couldn’t compete against existing food delivery companies in the U.K. like Deliveroo and Uber Eats. Since 2013, Deliveroo has carved out a sizable chunk of the U.K. food delivery market and become one of the fastest-growing tech companies in Europe. The company also differentiates themselves with their Editions project: geographically-targeted hubs of delivery-only cloud kitchens Deliveroo began rolling out in 2017.
Editions uses customer feedback and user data to pinpoint exactly which restaurants lacking in certain areas, or which types of cuisine are popular. It then entices restaurants to join their cloud kitchen hubs and set up delivery-only operations. Since Deliveroo sets up and owns the hubs, they have exclusive rights to deliver food from all the restaurants within them — which means more market share for them, and less leftover for Amazon. So instead of just signing on popular restaurants, like Amazon did, Deliveroo creates them in the exact areas with the greatest demand.
Amazon Restaurant and Uber Eats both launched in the U.K. around the same time. But while the former is closing up shop, Uber Eats is reportedly planning to launch 400 “virtual restaurants” in the U.K. by the end of this year to compete with Editions. Instead of building their own cloud kitchen facilities, Uber Eats will operate these restaurants in existing space within kitchens that already partner with Uber Eats for delivery. The company also recently launched 24-hour delivery, which had Deliveroo quickly promising the same thing in the near future.
It seems that Amazon’s name recognition and promise for one-hour delivery wasn’t enough to succeed the crowded U.K. food delivery market. With players like Deliveroo and Uber Eats already established in the space, the company would have needed some serious innovation, to carve out a space for itself.
Stateside, however, Amazon stands a better chance. The U.S. has a bigger food delivery market and a wider competition pool, which may work in Amazon’s favor.
Tom Parker, Senior Corporate Communications Manager of Amazon, UK & Ireland, reached out to us with this comment: “We are closing Amazon Restaurants UK. We would like to thank all of our customers and merchants, and delivery partners for their support.”