Amazon Restaurants Delivery Service To Official Close Down This Month

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The logo of Amazon is seen at the company logistics centre in Boves (Photo: REUTERS/Pascal Rossignol/File Photo)

In light of the growing competition in the online restaurant delivery market and a lack of reasonable revenues, Amazon has announced that it will be closing its delivery service arm Amazon Restaurants. The company initially established the online delivery service four years ago, as a direct competitor to services such as UberEats and Grubhub.

Amazon's delivery service operates in nearly 200 cities throughout the United States. The service allows people to order from local restaurants and have the food delivered directly to their doorsteps. According to Amazon, the service will officially become unavailable on June 24.

The company made the announcement on Tuesday, stating that it had decided to close down the service to allow it to focus more on its grocery deliveries. As part of the closure, a number of employees will be let go. However, a spokeswoman for the company revealed that they had already found other jobs within the company for some of the employees affected by the closure.

As the delivery industry grew in the United States, Amazon had entered into the game a little bit too late. The industry was predominantly ruled by companies such as UberEats, DoorDash, and Grubhub. Amazon struggled to get its Amazon Restaurants service off the ground given that the top three companies in the industry had control of over 80 percent of the market.

Over the years, investors have dumped billions of dollars into different delivery startups. This made it very difficult for Amazon to penetrate the already crowded market.

DoorDash had managed to raise more than $1 billion this year in two separate funding rounds. Meanwhile, Postmates announced that it would be going public this year.

In 2016, Amazon attempted to penetrate the online food delivery market in the UK. This endeavor proved to be futile for the company as it eventually ended up closing its delivery service after only two years. The company faced tough competition in the UK, specifically from the British food delivery service Deliveroo.

After failing to capture the market at home and abroad, Amazon changed its strategies. Earlier in the year, Amazon announced that it would be heavily investing in Deliveroo. This was a clear sign that Amazon was not thinking about purchasing stakes on already successful delivery companies instead of establishing one of its own.

According to market experts, Amazon may be shifting its strategy to potentially buy out an existing delivery service. The company could also make sizable investments into these firms to ensure that it still has a role to play in the growing industry. 

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