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Amazon Food Delivery Could Squash Competition

By Marty Roppelt
Published on: 08:04 PST, Apr 26, 2016

The newly-announced Amazon food delivery service kicked off in San Francisco with a limited time free delivery offer. The San Francisco launch is an expansion of the food delivery service Amazon already offers in a few other U.S. markets. The Bay Area expansion is the largest, though, including 33 zip codes, says the San Francisco Business Times.

For $99 a year, Amazon Prime Now subscribers already get a number of perks. While certain items can be delivered to subscribers in under two hours, Amazon promises food delivery in an hour or less.

Gus Lopez, Amazon Restaurants’ general manager, touted the new food delivery service’s benefits.

“San Francisco is known for incredible restaurants, and now Prime members across the city can enjoy their favorite local restaurants at home or at the office,” Lopez said.

Amazon expects more restaurants to join the 115 eateries that are now participating.

Amazon food delivery joins already-existing services like Munchery, UberEats, and Doordash. UberEats and Doordash offer similar services, delivering food from local restaurants, with some limitations in delivery areas and restaurants. Munchery has in-house chefs who prepare the food to be delivered.

The online retail giant’s deep pockets allows them to guarantee the same price as at the restaurant with Prime Now, with no delivery fees or other mark-ups. Otherwise, the customer gets a refund for the difference.

With the Prime Now membership, the customer can track their order from the time the item is ordered until it is delivered. San Francisco Eater reports, though, that once customers get thoroughly addicted to Amazon’s food delivery, the free delivery offer will change.

TechCrunch says that lacking the mark-ups, Amazon’s food delivery service is probably not turning a profit. Prime Now shares revenue with the restaurants taking part. TechCrunch also points out that Amazon never promised permanent free delivery. Currently, non-food retail items delivered in one hour carry an extra delivery charge of $7.99. And as for the restaurant-price guarantee, that offer expires at the end of 2016. The strategy is designed to establish Amazon in an increasingly crowded and growing field, says the web site.

Amazon food delivery restaurant selection in San Francisco is as eclectic as any other. DOSA specializes in South Indian cuisine. Big Chef Tom’s Belly Burgers is owned and operated by Tom Pizzica, a former finalist on TV’s Food Network Star. The Monk’s Kettle is a famed craft brewery offering pub fare. Nick’s Crispy Tacos was Zagat-rated for SF’s best tacos, and best for Mexican brunches. Chinese, Italian, and Mediterranean restaurants join places offering salads and sushi.

San Francisco is Amazon’s eighth food delivery market. The company first tested their delivery model in Seattle, its home base, and announced plans to expand last fall. In addition to Seattle and San Fransisco, Prime Now delivers in San Diego, Los Angeles, and Portland on the West Coast, and Chicago, Austin, and Baltimore.

Prime Now launched in Manhattan after great response to the original Amazon Prime two-day delivery that started in 2005. Prime Now services parts of more than 20 U.S. cities now. General manager Stephanie Landry said in a 2015 interview that Amazon is working to expand much further.

“When we see something that customers love, we definitely want to expand it as fast as possible,” Landry said.

Some Prime Now delivery drivers don’t love it, though. In 2015, shortly after Prime Now launched in California, several drivers sued Amazon. The drivers said the records kept by the company did not reflect what was actually owed them, and that they should have been classified as employees rather than contractor. They said the way the company did things, the drivers were working for less than minimum wage.

For the moment, however, the new Amazon food delivery service is bringing favorite dishes to customers in San Francisco.

[Photo by David McNew/Getty Images]

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