Amazon is investing in another e-commerce company again. This time, the gigantic company is investing in Deliveroo as part of a $575 million (£450 million) sum. The deal is going to be unveiled by Deliveroo over the next few days. The British-based Deliveroo has become one of the largest players in the "gig economy".
With a huge chunk of the fundraising Deliveroo has been doing lately coming from Amazon, there might be a chance for Deliveroo to really become globally competitive against Uber Eats. News.sky.com reports that Uber Technologies seemed set to buy Deliveroo out, but has since opted out of Deliveroo, selling its shares publicly in New York. Amazon is worth $920 billion. They have diversified to the point that they are occasionally worth over 1 trillion – one of a small handful of companies to do so. Moving into the UK food delivery market was not one of its great successes.
Amazon Restaurants UK
Based in London, the Amazon takeaway delivery service, Amazon Restaurants UK, met with overwhelming competition from Deliveroo, Uber Eats and Just Eat, among others. Amazon Restaurants UK closed last December. Amazon had previously tried to buy Deliveroo twice, whilst Uber was starting talks to take over the company.
If Amazon has indeed invested in Deliveroo, it would be one of the biggest investments Amazon has made in a British-based startup. All that being said, one insider already said the deal could still fall apart. Will Shu, Deliveroo's founder and chief executive, had started talks with prospective investors about a new round of funding. It is still unclear just how much money Amazon plans to invest if they decide to go through with the deal. The deal could still lead to Amazon deciding to take over the company in the future.
Tech startups need a lot of money at the beginning of their existence to get things up and running. Deliveroo has more than doubled its revenues since 2017, but also saw losses before taxes go up to almost £185m. Deliveroo could also go public, but is highly unlikely within the next year.
Riding The Riders
Deliveroo has faced a lot of contraversy with the way it treats its delivery riders. Deliveroo also excluded its huge number of contractors from a £10 million award of stock options to permanent employees. It did, however, change its supplier agreement in 2017 to change the terms on which literally thousands of couriers are employed. These changes included allowing their couriers to work for other companies at the same time as working for Deliveroo – a key switch that politicians had been criticizing in the so-called gig economy.
Independent Workers' Union
Last autumn, the IWU of Great Britain brought Deliveroo under judicial review, alleging that the company violates the riders' human rights with their being denied the right to collective bargaining.
Through it all, Amazon declined to comment.