Prime members can now get free Uber Eats delivery on restaurant orders over $25, and the news rattled DoorDash shareholders.
Amazon Prime members can now get free Uber Eats delivery on restaurant orders of more than $25. Amazon announced the deal last week. DoorDash shares then sold off, The Wall Street Journal reported Sunday, Nov. 8, though the paper called that reaction "overdone."
The offer covers nearly 10,000 cities and towns in the U.S. That includes big metro areas like Atlanta, Boston and Los Angeles, plus rural and suburban places. Uber's president and chief operating officer, Andrew Macdonald, said the goal was to make restaurant delivery feel as natural, convenient and affordable as ordering anything else on Uber Eats.
DoorDash is Uber Eats' rival, so a link between Uber Eats and Amazon looked like bad news for it. The Journal argued the worry was exaggerated. Uber Eats is simply taking the place of Grubhub, which had an earlier partnership with Amazon. Grubhub's share price did not get a lift from that earlier deal.
The Journal said the more important question is whether DoorDash can compete with Amazon and Walmart on grocery delivery. DoorDash recently announced a $17 billion deal to buy Instacart. Grocery delivery is a "relatively untapped" market, the report said. Emarketer data shows online sales will make up 15.5% of grocery sales this year.
DoorDash CEO Tony Xu said on a recent earnings call that shoppers are still asked to pay a premium for imperfect delivery. His plan is to manage inventory directly and spend "substantial sums" on warehousing and self-driving delivery. How much that will take is unclear. DoorDash's capital spending last year was roughly 4% of what Walmart U.S. put into its supply chain, customer-facing work and technology.
Walmart has a big head start. A PYMNTS Intelligence report estimates it controls about 21% of U.S. food and beverage spending, versus around 3% for Amazon.
The report does not say whether other Uber Eats charges still apply on top of free delivery. It also does not say how long the offer lasts, or how DoorDash will answer. Those details matter for how much a Prime member actually saves.
If you have Prime, check the Uber Eats app for free delivery on restaurant orders over $25 before you pay a delivery fee.
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