Amazon has announced it will close its US Amazon Restaurants delivery business, as reported by GeekWire.

Closure of the service

Amazon is set to close its Amazon Restaurants service later this month. The food delivery service launched in Seattle in 2015, offering Prime members meal delivery using the Amazon Restaurants website or via the Prime Now app. Amazon Restaurants was available across more than 20 cities in the US, and was later expanded into London. The closure of the service follows Amazon’s decision to end Amazon Restaurants in the UK in November 2018. Amazon’s workplace lunch delivery service, Daily Dish will also end this month.

A competitive market

In the US, Amazon has faced much competition in the growing meals delivery market from local competitors including Grubhub, Uber Eats and DoorDash. The online takeaway market is competitive and requires scale. Shoppers want choice, convenience and value. Operators therefore have to attract partner restaurants and do this by providing additional services, such as, last mile delivery or support with recipe and meal planning. They also have to invest to acquire customers through discounts.

The market is important for Amazon as it has a high frequency of purchase and the Amazon flywheel model relies on traffic to the website. The news follows Amazon’s significant investment in food courier company Deliveroo. As previously demonstrated with its acquisition of Whole Foods Market, Amazon is willing to invest significantly to achieve scale quickly.

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Morrisons is rolling out its home delivery deal with online retailer Amazon to more cities, while Waitrose extends its Rapid Delivery trial to more London postcodes.

Expansion of home delivery deal with Amazon

Following the announcement of their supply agreement in 2016, Morrisons is extending its home delivery deal with Amazon. The expansion will see new cities benefit from the delivery deal throughout 2019 including Glasgow, Newcastle, Liverpool, Sheffield and Portsmouth. The deal offers customers same-day delivery on Morrisons products for Amazon Prime Now and Amazon Pantry customers.

Morrisons will also begin to sell directly to customers as it becomes a featured retailer on Amazon’s Prime website and app, through Morrisons at Amazon.

David Potts, chief executive and Morrisons, commented: "Morrisons' conveniently located local supermarkets and Amazon's very popular website and customer offer are an ideal combination, offering ultra-fast same-day grocery home delivery for customers in and around cities across Britain. Amazon has been a valued partner of Morrisons for over three years and we are pleased to be expanding our relationship together”.

Waitrose extends Rapid Delivery trial

Waitrose & Partners has announced it is set to roll out its Waitrose Rapid Delivery service to more London postcodes, as well as areas outside the capital.

Through its partnership with delivery start up ‘On the Dot’, shoppers can purchase up to 25 items from over 2,000 products and have them delivered within two hours, or on the same day. Delivery is priced at £5.

The move follows the success of its London-based trial, which launched in September 2018.

The expansion will see a further 58 London postcodes benefit from the service including areas such as Battersea, Bayswater and Victoria. Outside London, customers in Bath and Hove will have access to the offer from the 8^th and 15^th July, respectively.

Nicola Waller, Head of Business Development at Waitrose & Partners, commented on the news: “There is a growing number of customers who want to get their shopping as and when they want it which gives us a great opportunity to continue testing the appetite for the service in new locations both inside and outside of London”.

The move aligns with Waitrose’s continued efforts to deliver more convenient solutions, last month the retailer also expanded its in-home unattended delivery service.

Rapid delivery competition

As shopper demand and expectations continue to rise, increasingly we are seeing online retailers invest in improving their delivery standards, not only offering same day delivery, but also more immediate solutions for shoppers. Morrisons extending its deal with Amazon and Waitrose extending its Rapid Delivery service are not the only examples of retailers tapping into the trend of creating more convenient solutions for customers.

In March 2019, Ocado also launched its one-hour delivery service in London, Ocado Zoom while Co-op soon after launched its first online home delivery service offering customers delivery via a dedicated online store in as little as two hours. Most recently, Amazon re-entered the growing meals delivery market through its investment in food courier service Deliveroo.

Retail Analysis subscribers can see how shoppers are using online rapid delivery and how manufacturers from across the world, can meet the opportunity in our Online rapid delivery opportunity report here.           

IGD Amazon Vendor Leadership Day 2019

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Hear directly from the Amazon UK leadership team and learn about how you can grow your business with them.

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Amazon has announced it is set to launch its autonomous drone delivery service ‘within months’.

15 miles in less than 30 minutes

Amazon’s drone delivery service, Prime Air, will deliver packages under five pounds to customers in less than 30 minutes using drones that can fly up to 15 miles. According to Amazon, Prime Air will be rolled out to customers within months. It is not known yet where and when the drone delivery service will be introduced.

Safety was a key focus for Amazon in development of the drones, due to customer concerns. The drones will be operated by artificial intelligence (AI) technology, which provides safety enabling the drones to detect moving and static objects.

The Prime Air service is also one of Amazon’s sustainability initiatives to achieve Shipment Zero, in which the retailer aims to make 50% of all shipments net zero carbon by 2030.

The announcement follows Amazon’s launch of free one-day delivery to more than ten million products for Prime members in the US, highlighting the retailer’s priority of getting packages to customers in a faster way.

Winning in the last mile

As shopper demand for receiving products in a quick and easy way is continuously increasing, we are seeing rising competition in the ‘last mile’. The food industry and disruptors continue to create solutions that make online shopping even more convenient, and we expect to see further innovation amongst retailers to achieve this. Drone delivery provides an effective and efficient way to reach customers, and will result in quicker deliveries, ultimately making online more appealing. It will also cut the cost of last-mile fulfilment, making online more profitable. In January 2019, JD.com, China’s largest retailer, also tested delivery by drone. The retailer completed Indonesia’s first government-approved drone flight – a breakthrough for drone delivery in Southeast Asia.

Want to know more?

We’ve identified numerous examples from around the world of last mile solutions that help online shoppers embrace convenience in our Last mile: delivering the goods report.

For more information on Amazon, our Strategic outlook for Amazon report looks at the retailer’s strategy, results and opportunities for manufacturers.

IGD Amazon Vendor Leadership Day 2019

10 September, London

Hear directly from the Amazon UK leadership team and learn about how you can grow your business with them.

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