Amazon Knows Infrastructure is Vital
The Seattle based company, Amazon, just got the green light from a UK regulatory agency to have a stake in Deliveroo. This is an important step forward for Amazon in establishing a further presence in the United Kingdom.
The logistics and commerce firm already worked out the details a year ago but needed to get past the regulatory agency. There’s a variety of reasons as to why the regulatory paused the transaction in the past. The main point is the decrease in competition. It seems that the organization had a change of heart and decided that it wasn’t so bad after all.
Covid-19 changed the game for everyone. Non-essential people are sitting at home, and critical people roam around the cities and suburbs. Workflows and ways of life are changing amidst the coronavirus pandemic, and priorities are shifting.
Amazon has a leg up in logistics and delivery as it has been focusing on this sector for a while; this expertise can be utilized to provide more value in situations like these. Further, Deliveroo is an essential service that is becoming a core part of the infrastructure in the UK. People love to use the service to order food from restaurants in the UK. Still, Deliveroo did get hurt by the pandemic. A lack of a wide variety of restaurants means that Deliveroo doesn’t have different options to provide and commissions to collect.
Deliveroo and Fast Growth
“If it’s raining and you’re hungry, I want you to think of Deliveroo immediately,” he said back in 2013. “We want it to be so affordable and high quality that it’s not even a choice in your mind.”
The company has a decently viable business model when everything is going well but can get hurt when things are not.
This is a problem for the fast growing, money burning, food delivery startup. Deliveroo grew over 107,000% over the span of four years. It is present in a wide variety of countries across the globe and contends with brands such as JustEat to deliver delicious food to hungry customers.
It follows the trend of other startups where they prioritize growth over cash. It is a strategy that works until something like COVID-19 comes out of nowhere and makes a dent in your plans.
The company has the infrastructure, the expertise, the years of experience and knowledge in how the business works. It needs capital. The funds help it to keep going and serve customers. That’s where Amazon comes in and makes a difference.
Amazon is well poised to invest as it expressed it in the past and would have no problem keeping Deliveroo alive. It is a deal that makes sense for Amazon, Deliveroo, the regulators, and for the people that they serve regularly. Watch this area a little more closely as this is another area that will likely see more consolidation when everything is said and done. Support from Amazon will help Deliveroo to continue to carry out its mission while innovating and bringing in more food for people.