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Amazon Expands Restaurant Delivery Service to San Diego

Amazon.com Inc. 's AMZN Prime membership is growing in the U.S. market as the one-hour restaurant delivery service recently reached San Diego.

The service allows Amazon Prime members to view menu and order food from listed restaurants through the Prime Now app. The listed local outlets are Carnitas' Snack Shack, Dumpling Inn, Rubicon Deli, T Deli, Tajima and Tandoori Hut, to name a few. An order-tracking facility has also been added to the app.

As of now, the restaurant delivery service is available in 16 San Diego zip codes. Prime members can download the app or visit amazon.com/primenow to check if their area qualifies for the service. Customers will be able to see the names of the restaurants on the home page if their area is covered under the delivery service. More restaurants will be added soon.

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 offering similar services.

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

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 beverages and now restaurant food in certain regions of the U.S. Prime Now members can browse and purchase items through a dedicated app and avail two-hour delivery for free or pay $7.99 for the one-hour service.

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 counter the competition.

Amazon currently has a Zacks Rank #3 (Hold). Some stocks in the same space that investors may consider are Alibaba Group Holding Limited BABA , Groupon, Inc. GRPN and Mercadolibre, Inc. MELI . All these stocks sport a Zacks Rank #2 (Buy).

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

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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.

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