May 30, 2024 - Business

Amazon adds Grubhub ordering to its app

Illustration of a take out box made out of cardboard with the Amazon smile logo on the side of the box.

Illustration: Aïda Amer/Axios

Amazon customers in the U.S. can now order food delivery inside Amazon's app through Grubhub, the companies announced early Thursday.

Why it matters: "It's actually the first time we've had third party restaurant ordering inside the Amazon app," Jamil Ghani, worldwide VP of Amazon Prime, tells Axios in an interview.

Driving the news: Amazon is deepening its partnership with Grubhub by embedding the food delivery platform into its ecosystem and making Grubhub+ memberships a permanent Prime subscription perk.

  • Any Amazon customer can search for "Grubhub" in the product search bar of Amazon's app to order, track and manage their food, like they would through the Grubhub app.
  • Amazon Prime members have the additional option to activate Grubhub+, a subscription service that alone costs $120 a year. With Grubhub+, they get free delivery of eligible orders over $12, as well as 5% credit on pick-ups and other discounts.

The big picture: The changes fuel both companies' subscription products — which are designed to spur more spending, at a time when consumers are more budget conscious.

  • Amazon, specifically, needs to keep proving that its Prime subscription is worth the cost as it gears up for Prime Day sales in July. Competitors like Walmart are also beefing benefits in their own Prime-like programs.
  • For Grubhub, being integrated into Amazon's platforms will likely boost usage of its food delivery services, and that could chip away at the dominance of Door Dash.

What they're saying: "This partnership gives us scale," Grubhub CEO Howard Migdal tells Axios in an interview.

  • And because scale drives efficiencies, the company "would love to pass on savings to both customers and restaurants."

Context: Amazon and Grubhub entered into a partnership nearly two years ago.

  • The terms of that deal gave Amazon a food delivery feature it had long-desired, while Grubhub gained Amazon as an investor and channel for new customers.
  • Grubhub is owned by Just Eat Takeaway.com, a Dutch company that's been trying to offload the delivery platform.

Zoom out: Grubhub is still small compared to its competitors.

  • DoorDash and subsidiary Caviar dominate deliveries in the U.S., making 67% of drop-offs as of March, according to Bloomberg Second Measure transaction data.
  • Uber, through Uber Eats and subsidiary Postmates, made up 25%.
  • Grubhub and its delivery subsidiaries, including Seamless, reached 8%.
  • Globally, DoorDash has 500,000 merchants and 2 million monthly active couriers in over 25 countries, according to the company.
  • And Uber reported 7.1 million drivers and couriers around the world as it builds a "flexible work" platform in its most recent earnings report.
  • Grubhub now supports 375,000 businesses in the U.S. and has "close to 200,000 drivers," according to Migdal.

What we're watching: As inflation remains sticky, customers have still been ordering in — but of fewer items per delivery to try to save, Migdal says.

Worth noting: Amazon says customers can opt-in to linking their Grubhub account with their Amazon account.

  • Doing so will give Grubhub access to their Amazon profile information (name, email) and Prime status, but Grubhub will not be able to see details about other Amazon customer orders.
  • Amazon, on the other hand, will be able to see "some information" about Grubhub orders placed through its platform and says that it doesn't use customer data for purposes that customers haven't consented to.
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