Amazon Expands Partnership with Grubhub to Offer Free Delivery Service for Prime Members

Amazon has announced an extended collaboration with food delivery service Grubhub to improve the dining experience for its customers. This partnership includes a complimentary subscription to Grubhub+ for Amazon Prime members in the U.S., allowing them to order directly from hundreds of thousands of restaurants accessible on Amazon’s website and app. Prime subscribers can now enjoy benefits such as free delivery on eligible orders over $12, reduced service fees, and exclusive offers with Grubhub+.

The agreement builds upon the existing agreement between Amazon and Just Eat Takeaway, Grubhub’s parent organization based in Amsterdam. Previously, Amazon Prime members received a one-year Grubhub+ membership. Jamil Ghani, VP of Amazon Prime, highlighted the convenience this partnership brings to busy households across the country, offering a comprehensive solution within a single membership.

Amazon had previously ventured into the meal delivery market with Amazon Restaurants but discontinued the service in 2019 to focus on grocery delivery instead. As part of the expanded agreement, Amazon has gained warrants for a potential 14% stake in Grubhub, with the ability to purchase a 2% stake upfront.

Grubhub has faced stiff competition in the U.S. food delivery sector, holding just 8% of the market share compared to DoorDash’s dominant 67% and Uber‘s 25% share. Analysts are monitoring the impact of this enhanced partnership on Grubhub’s market positioning, especially considering Amazon’s extensive reach and distribution capabilities.

RBC Capital analyst Brad Erickson noted that following a similar deal in 2022, Uber observed minimal competitive effects, while DoorDash experienced a temporary decline in downloads before reverting. The dynamics of this collaboration will be closely observed given Amazon’s significant influence in the retail and delivery landscape.