Amazon Is Getting Into Delivery: Should Restaurants Be Worried?

June 6, 2018

The answer is: not yet. But you always have to keep an eye out for Amazon. These are the guys that started out delivering and offering e-books (anyone else remember that?); now, Amazon is the world’s third most valuable company. With the power and wealth the company has amassed, they could change the environment of any sector they wish to enter. We recently witnessed it when Amazon purchased Whole Foods.

So what exactly is going on?

Amazon.com Inc. is preparing to launch a delivery service for businesses, positioning it to compete directly with United Parcel Service Inc. and FedEx Corp.

Dubbed “Shipping with Amazon,” or SWA, the new service will entail the online retail giant picking up packages from businesses and shipping them to consumers.

The Amazon delivery roll-out has already started in Los Angeles, starting with third-party merchants that sell goods via its website. Amazon then aims to expand the service to more cities as soon as this year.

While the program is being piloted with the company’s third-party sellers, it is envisioned as eventually accommodating other businesses as well. Amazon is planning to undercut UPS and FedEx on pricing, although the exact rate structure is still unclear, so we will just have to wait and see what happens.

Why does this matter restaurants?

Well, back in 2015, Amazon Restaurants was created to offer food delivery to Prime members if they met a minimum purchase amount. Amazon’s delivery partners deliver restaurant meals typically in one hour or less.

And this past February, Amazon announced it would roll out free two-hour delivery of Whole Foods Market items through its Prime Now service.

We are speculating, but if a company builds a distribution/delivery network of finished goods to consumers, can that business deliver food as well? Theoretically, Amazon could deliver the clothes rack, beer making set AND the tacos you ordered from your favorite restaurant across town. Since Amazon wants to ingrain itself into every facet of our lives, this doesn’t seem like too much of a stretch.

What do you think?

One restaurant consultant said the impact of the reported “Shipping with Amazon” program on restaurant delivery was hard to gauge, as the report cast it as more of an end-to-end shipping solution, with pickups from businesses and shipments made to consumers.

This could be 100% true and we are over here worrying ourselves over nothing. But what if? It is always important to check your peripherals. Stay tuned and we will keep you updated!

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