Amazon is taking on existing food delivery apps with its own twist on takeout, potentially threatening the livelihood of upstarts such as Postmates and DoorDash.
Tuesday, the e-commerce company expanded its Prime Now offering in San Diego to include delivery from more than 90 restaurants. Now, people in select neighborhoods can use the company’s Amazon Prime Now mobile app to get food delivered in an hour or less, all while following the progress of an order from start to finish.
“As we’ve been building out (Prime Now) delivery for our own retail products and third-party merchants, a great way to extend that is to bring great meals from local restaurants,” said Gus Lopez, general manager of Amazon’s restaurant initiative. “Customers are already using the Prime Now app to order items in one or two hours. To be able to order food in under an hour is a great, new capability we’re offering our customers.”
Offered in select U.S. markets, Prime Now is a perk bundled with Amazon Prime membership, giving members who use the Prime Now mobile app access to one- or two-hour delivery windows for a variety of items, including alcohol, groceries and local fare from retail partners.
Now, with restaurant delivery, Prime members can order from almost 100 eateries, including Carnitas’ Snack Shack, Dumpling Inn, Native Foods, Tandoori Hut and Urban India. Delivery time is, on average, 39 minutes in markets where Amazon is already dispatching food orders.
Amazon, which partners with the venues and takes a cut of each order, expects its list of restaurants and available ZIP codes to grow with time.
Prime Now delivery ZIP codes
92101, 92103, 92104, 92108, 92116, 92123, 92134, 92106, 92107, 92110, 92140, 92147, 92102, 92105, 92109 and 92111
Though one-hour Prime Now delivery typically adds a $7.99 surcharge, restaurant orders are being offered to customers free of all extra fees - save for an optional driver tip. Amazon also insists that people will pay only what restaurants charge their dine-in and carry-out customers, meaning no markups on menu items. Perhaps, then, the only catch is that food deliveries, like all other Prime Now orders, require a minimum order of $20.
Undercutting rivals’ fees
The fee-free, speedy service means Amazon is undercutting many rival food delivery apps operating in the area, including GrubHub, Postmates and DoorDash. The last two charge a minimum $3.99 fee per delivery, and Postmates’ rates spike when demand is high.
“For consumers, we want it to be easy for them to order from restaurants. And we know from talking to customers that they sometimes complain about hidden fees and markups on menus. That just became an important thing for us to focus on,” Lopez said.
Amazon’s ultimate objective is to recruit more paying Prime customers, as subscribers tend to shop and spend more with the e-commerce company.
The company does not disclose the size of its subscriber base, but third-party firm Consumer Intelligence Research Partners recently pegged U.S. membership at 54 million people. Prime members spend, on average, $1,100 per year, or 83 percent more than the $600 per year that non-members spend, according to the firm.
Prime Now restaurant delivery is available in 16 San Diego ZIP codes, spanning central neighborhoods such as downtown, Midway District, Mission Valley and Kearny Mesa.
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