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Amazon-Grubhub deal plays to Prime customer loyalty – and boosts TKWY shares


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    137.64 USD
    -1.87 -1.340%

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Containers filled with takeaway food ready to be delivered
Amazon-Grubhub deal announcement pushed AMZN shares up 3% and sent Grubhub parent Just Eat Takeaway's shares up 18% – Photo: Shutterstock

US customers of Amazon.com’s (AMZN) Prime service can now order food from Grubhub without delivery fees and earn exclusive perks as the tech giant announced a deal that includes taking a stake in the food delivery firm.

Prime members can order food in over 4,000 US cities.

Amazon stock was up 3% on the news while UK-listed shares of Grubhub parent Just Eat Takeaway (TKWY) were up 18%.

Amazon (AMZN) stock price

Amazon stock is down 9% just a month after a 20-for-1 stock split.

Founded in 1995 by Jeff Bezos, Amazon started selling books online before expanding into products such as electronics, clothing, furniture and many other items.

An Amazon distribution warehouse in PolandShutterstock

The company also provides content through Amazon Prime Video and Amazon Music and is involved in producing film and TV shows as well as cloud computing.

Amazon’s success has made it the fifth largest company in the world with a $1.4tn market capitalisation with more than 1.6 million employees around the world.

Just Eat Takeaway (TKWY) share price

Amazon-Grubhub equity stake

Amazon.com will also have the option to acquire a 2% stake in Grubhub, which could rise to 15% under certain performance conditions, Just Eat said.

Just Eat is still looking for a buyer for Grubhub, which delisted from the Nasdaq exchange earlier this year.

Founded in 2000, Amsterdam-headquartered Just Eat operates an online food delivery marketplace across North America, Europe and parts of Latin America. It bought Grubhub for $7.3bn (£6.1bn, €7.2bn) in 2020.

“Amazon has redefined convenience with Prime and we’re confident this offering will expose many new diners to the value of Grubhub+ while driving more business to our restaurant partners and drivers,” Grubhub CEO Adam DeWitt said in a statement.

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The deal is expected to increase business for Grubhub which has lost out to rivals such as DoorDash (DASH) and Uber Eats, the food delivery business of Uber Technologies (UBER).

DoorDash (DASH) stock price

Amazon Prime Day next weeek

A computer screen showing the Amazon Prime Day websiteShutterstock

Amazon’s famous Prime Day takes place on 12 July, giving shoppers a 48-hour sales event across North America, Europe and parts of Asia.

The two-day online sales event will include major brand names as well as Amazon.com’s own range of electronics.

“With the small businesses and national brands our members love and trust, we’re excited to offer some of our best Prime Day deals yet to even more customers around the world,” Amazon Prime vice president  Jamil Ghani said in a statement.

Investors will be watching Prime Day sales numbers for signals on the company’s performance and consumer demand in general. Amazon.com will report quarterly results for the second quarter at the end of July.

 

Further reading...

What You Need to Know

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