Amazon and Deliveroo offer free delivery to Prime subscribers

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Ecommerce updates

Deliveroo and Amazon have formed their first customer-facing partnership since the US e-commerce group agreed to invest in the London food app two years ago, offering Prime customers free delivery on certain orders.

The move comes despite UK regulators looking at the risks of such a connection when considering whether to approve Amazon’s investment in Deliveroo, originally agreed in 2019.

Millions of Amazon Prime subscribers can get unlimited free deliveries of Deliveroo grocery and restaurant orders for a year as long as they spend more than £ 25 per order. The offer corresponds to the “Silver” tier of Deliveroo Plus, which normally costs £ 3.49 per month.

Lisa Leung, director of Prime and Marketing at Amazon UK, said the company is “always looking for ways to add even more value to Prime members.” In addition to free shipping, discounts and the video streaming service, Prime discounts beyond Amazon’s own product network previously included a free Nintendo Switch online membership for one year and reduced mobile phone contracts.

During its investigation last year, the UK competition authority raised concerns that using Amazon’s Prime network could give Deliveroo an unfair advantage over rivals like Just Eat Takeaway.com and Uber Eats.

However, the competition and market surveillance authority finally came to the conclusion that such cooperation would not present a “significant” risk that justifies intervention.

“The CMA has determined on a realistic basis that the parties have the option to bundle Deliveroo Plus and Amazon Prime, and could use this strategy to foreclose Deliveroo’s competitors,” the agency wrote in its final decision to clear the deal in August 2020.

“However, the CMA also noted that any foreclosure incentives resulting from the transaction would not be sufficient to lead to a realistic prospect of an SLC [substantial lessening of competition]. “

Amazon shut down its own restaurant delivery service in the UK in late 2018, just before starting talks about an investment in Deliveroo. Both Amazon and Deliveroo have expanded their grocery delivery services separately. Amazon, which owns Whole Foods, opened six of its physical fresh grocery stores in London this year, using “just walk out” technology to do away with traditional checkouts.

Deliveroo has announced that it will use a portion of the proceeds from its March IPO to expand its Plus subscription service, which is seen as essential to loyalty and customer loyalty in the highly competitive market.

Last month, Deliveroo’s shares briefly returned to 390p, which the company valued its IPO at, but then fell back to 331p on Tuesday.

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