Markets

Amazon Expands Prime Now with Restaurant Delivery Service

A generic image of a person with a pen and a calculator
Credit: Shutterstock photo

Amazon.com Inc.AMZN recently expanded the Amazon Prime Now same-day delivery services. The company has added restaurant delivery service to the bunch of offerings provided by Amazon Prime Now in Seattle.

The restaurant delivery service will allow Amazon Prime members to view the menu and order food from the listed restaurants using the Prime Now app. The local restaurants from where Seattle residents can order food are Cactus, Wild Ginger, Skillet, Marination Station, Re:public, Café Yumm!, Ten Mercer and Mamnoon, among others. An order-tracking facility has also been added in the app.

The restaurant delivery service, available in a few Seattle zip codes, will be expanded to other cities later.

Competitors

A lot of companies are trying to alter the face of the food delivery service in the same way that tech start-ups like Uber changed the taxi industry. In addition to GrubHub and Postmates, the online retail giant faces competition from Sprig, Munchery and Spoonrocket.

Companies like GrubHub and Postmates allow consumers to order meals through smartphone apps from a range of restaurants and have it delivered to their homes.

All these companies are going after the 365,000 autonomous U.S. food joints, which garner about $70 billion through takeouts every year, per GrubHub's latest annual report.

GrubHub predicts that this has the potential to be a $100 billion market. This is because a lot of these ventures are not prepared to deliver, and if more restaurants were delivering more people would order it.

Amazon Prime Now

In Dec 2014, Amazon rolled out the one-hour delivery service in a small area in Manhattan. Amazon Prime Now delivers household items, alcoholic beverage and now restaurant food for Seattle customers only. Prime Now members can browse and purchase items through a dedicated app and have the orders delivered in two hours for free or in one hour by paying an extra $7.99.

Going Forward

The food delivery business has razor-thin profit margins and complicated logistics. However, considering Amazon's own fleet of delivery trucks and vast experience in logistics and distribution, we believe it is well-equipped to compete with other mobile food delivery players, like GrubHub and Eat24.

Amazon currently sports a Zacks Rank #1 (Strong Buy).

Other stocks in the same space that investors may consider are Stamps.com Inc. STMP , Travelport Worldwide Limited TVPT and Autobytel Inc. ABTL . While Stamps.com and Travelport carry the same Zacks Rank as Amazon, Autobytel has a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

AMAZON.COM INC (AMZN): Free Stock Analysis Report

STAMPS.COM INC (STMP): Free Stock Analysis Report

TRAVELPORT WWD (TVPT): Free Stock Analysis Report

AUTOBYTEL INC (ABTL): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

AMZN STMP

Other Topics

Stocks

Latest Markets Videos