By Kate Holton
LONDON (Reuters) – Amazon has led a funding round in British online food delivery company Deliveroo, pitting itself against Uber Eats and other smaller providers in an escalating battle to deliver takeaway meals.
The news that the world’s biggest online retailer had taken a stake in one of Europe’s fastest growing tech companies sent shockwaves through the sector, hitting shares in rivals Just Eat, Takeaway.com and Delivery Hero.
Deliveroo founder and CEO Will Shu said the investment would enable the group to further expand its reach, develop its technology and pursue innovations such as the launch of its own kitchens that can be rented to restaurants to meet demand.
Deliveroo said Amazon was the lead investor in a new $575 million funding round. The new Series G funding takes the total Deliveroo has raised to date to $1.53 billion.
Its existing investors are T. Rowe Price, Fidelity Management and Research Co, and Greenoaks.
“Amazon has been an inspiration to me personally and to the company, and we look forward to working with such a customer-obsessed organisation,” Shu said.
Headquartered in London, Deliveroo uses 60,000 riders dressed in black and teal jackets to deliver meals from over 80,000 restaurants and takeaway outlets in 14 countries including France, Germany, Hong Kong, Singapore and Kuwait.
In Britain it is locked in a battle with Uber Eats and the online platform Just Eat and its riders are a common sight carrying delivery boxes emblazoned with its kangaroo logo.
“We’re impressed with Deliveroo’s approach, and their dedication to providing customers with an ever increasing selection of great restaurants along with convenient delivery options,” said Doug Gurr, Amazon UK Country manager.
“Will and his team have built an innovative technology and service, and we’re excited to see what they do next.”
The arrival of Amazon alarmed smaller rivals in the sector such as Just Eat, which saw its shares fall 10 percent in early trading over fears it would be squeezed between two online giants with global ambitions and deep pockets.
Just Eat had a market valuation of 4.6 billion pounds ($5.9 billion) prior to Friday’s fall.
Amazon currently sells food in Britain through its Amazon Fresh, Amazon Pantry and Amazon Prime Now services and has a wholesale deal with supermarket Morrisons. But, according to market researchers Kantar Worldpanel, its UK grocery market share is still less than 1 percent.
It has previously tried and failed to run a restaurant delivery service in Britain. ($1 = 0.7826 pounds)
(Reporting by Kate Holton in London and Ismail Shakil in Bengaluru; Editing by Bernard Orr and Keith Weir)
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