Why Amazon Couldn’t Compete With Uber and DoorDash
The e-commerce giant announced yesterday it’s shutting its Amazon Restaurant and Daily Dish platforms on June 24. Amazon Restaurants allowed Prime users to order from nearby restaurants while the Daily Dish was a lunch delivery service. GeekWires first reported the closures.
The company failed to gain traction on competitors in the food delivery space since Amazon Restaurant launched in 2015. Four companies dominate the U.S. food delivery service industry: Uber, Grubhub, Postmates and Doordash make up 93 percent of the market share.
It’s a rare black eye for a company that has dominated its competitors in nearly every arena it enters.
Unlike other Amazon products, Amazon Restaurants didn’t have a huge reach with a broad base of consumers. The platform operated in 20 cities in the U.S. and London, lagging UberEats, which is in 500. Grubhub does business in more than 2,000 cities nationwide. Postmates, which filed its IPO earlier this year, operates in 3,500 cities.
Amazon Restaurant’s competitors are only getting bigger. DoorDash announced last month it’s raising $ 600 million and is now valued at $ 12.6 billion. DoorDash leads in sales in five of the 10 largest metro areas; San Francisco, Washington D.C., San Antonio, Dallas – Fort Worth, and San Diego. Grubhub dominates New York in 68% of delivery sales. Grubhub also leads in the Chicago and Boston metro areas. UberEats leads the pack in the Miami metro area.
Amazon did lead delivery sales in one area—you guessed it, in Seattle, where the tech giant is headquartered.
In addition to the small number of cities served, Amazon Restaurants limited its service to only Prime members, while competitors focused on bringing in customers from anywhere.
Additionally, all of Amazon Restaurant’s direct competitors had exclusive deals with several large restaurant chains. UberEats recently partnered with Seattle-based Starbucks and McDonalds. DoorDash is working with Chipotle, Chick-Fil-A, The Cheesecake Factory and Papa Johns. Postmates joined forces with Popeyes. Grubhub teamed up with Yum Brands, owners of Taco Bell and KFC.
Amazon isn’t totally ducking out of the food delivery business. The company is funding a major expansion of Deliveroo, a London-based service that is planning to expand across the U.K. In its latest funding round, Deliveroo secured $ 575 million. Although the full amount wasn’t disclosed, Amazon is the largest investor in the project.
More must-read stories from Fortune:
—A red flag to investors: The stock market may be hitting the “triple top”
—The Renault deal is dead, but Fiat Chrysler still needs a partner
—Many economists think the next recession will be before the 2020 election
—The S&P 500 has performed far worse under Trump than Obama
—Listen to our new audio briefing, Fortune 500 Daily