Grubhub pins hopes on Amazon

Hi, it’s Natalie in New York. Grubhub’s new five-year agreement with Amazon to incorporate food delivery into Amazon’s app may not help as m [View in browser]( [Bloomberg]( Hi, it’s Natalie in New York. Grubhub’s new five-year agreement with Amazon to incorporate food delivery into Amazon’s app may not help as much as Grubhub hopes, if history is any guide. But first... Three things you need to know today: • Shari Redstone ended talks to sell her [controlling interest in Paramount]( • Oracle reported strong AI demand for its [cloud computing business]( • Samsung has hired a former Apple executive to [lead its North American AI group]( Prime customers [Grubhub](, the struggling US meal-delivery business, [announced]( May 30 it was expanding its two-year-old partnership with [Amazon.com Inc.](bbg://securities/AMZN%20US%20Equity) and giving Amazon Prime members free food delivery. As part of the new deal, Amazon also incorporated Grubhub’s delivery service directly into its shopping app and website, and increased its financial stake in the company owned by [Just Eat Takeaway.com NV](bbg://securities/TKWY%20NA%20Equity). Grubhub Chief Executive Officer [Howard Migdal](bbg://people/profile/21077922) told me this deepened relationship with Amazon will be a key catalyst for user growth and revenue. Prime members are a “good cohort” of customers as they tend to order more frequently than Grubhub’s average customer, he said. So far there has been an immediate boost: Grubhub’s app downloads [jumped](bbg://news/stories/SEI6POGQD79C) 90% in the week of the announcement compared with the previous week, and the number of users opening the app [rose](bbg://news/stories/SEV5DOGFFW8W) more than 9% for two straight weeks, outpacing that of food and grocery peers. That’s according to Bloomberg’s analysis of data tracked by mobile research firm Apptopia. But this could prove challenging to sustain. While the pace of overall order declines reported by parent Just Eat’s US and Canadian business has slowed in recent quarters, third-party data from market research firms SimilarWeb and YipitData show that the initial 2022 Amazon-Grubhub partnership hasn’t reversed the streak of losses in orders and users for Chicago-based Grubhub. The company has dropped a significant amount of market share to delivery rivals DoorDash Inc. and Uber Technologies Inc. as they ramp up competition through offerings beyond just takeout meals from restaurants. Yipit’s data shows Grubhub market share fell to 6% in March from 11% in August 2022, with a loss in urban users the most pronounced. Rivals in recent years have raced to expand the number and types of stores on their sites and improved their technology to let customers bundle multistore orders without additional cost, which Grubhub hasn’t [allowed](. [DoorDash]( and [Uber](, in particular, have enhanced their routing algorithms so their delivery couriers can seamlessly pick up a last-minute drugstore item, drinks from a liquor store, or condiments from the grocery store while en route to grab a restaurant order nearby. These upgrades let the companies “upsell” consumers and advertise relevant items to bundle into their order, helping expand the size of the basket and increase ad revenue from brands. Making the Grubhub+ subscription free for the [180 million US shoppers]( who are part of households with a Prime membership could entice those consumers to keep their Prime accounts, which would be a boon for Amazon. But at the same time, it wipes out potential customers for Grubhub’s subscription service — and the revenue they might have generated. That makes the sale of Grubhub, which Dutch parent Just Eat has been considering since 2022, “[less likely](bbg://news/stories/SEAI5PDWX2PS),” according to Bloomberg Intelligence analysts. So far, a customer who tries to place a Grubhub order within Amazon won’t find it as easy as described. According to Grubhub, users can visit a dedicated [website]( to start a Grubhub order; or they could be directed to that site through a variety of paths from Amazon. On Amazon’s mobile app, the Grubhub button is hidden within the “Groceries” tab, below buttons for Amazon Fresh, the grocery delivery service, and Amazon’s Whole Foods. Alternatively, users can type “Grubhub” in the Amazon search bar to access the Grubhub banner. At least two more clicks are needed to launch the restaurant ordering interface in an in-app browser window, which makes the experience foreign to the Amazon app. This makes the integration more of a bonus than a feature of convenience. Whether the deal can effectively convert new users to loyal Grubhub customers remains to be seen.—[Natalie Lung](mailto:flung6@bloomberg.net) The big story The US is cracking down on exports of semiconductors [to Russia](, which officials think are passed from third-party sellers in Asia. And the Biden administration is considering [greater restrictions]( on access to powerful artificial intelligence chip technology to China. One to watch [Laure Négiar, a portfolio manager at Comgest, speaks on Bloomberg Television about the Biden administration’s plans to further restrict China’s access to chip technology.](​​​​ Bloomberg Technology podcast [Foundering: The OpenAI Story is a narrative podcast that examines the rise of Sam Altman, from the time he was a 19-year-old startup founder, then the head of Y Combinator, and now the billionaire king of this AI boom.]( Get fully charged A London hospital is asking its workers to [donate blood after a cyberattack](. Amazon said it would put $1.4 billion toward building 14,000 affordable homes in [Seattle, Nashville and Washington](. Temu is luring more repeat customers to its e-commerce site than eBay, [putting pressure on Amazon](. More from Bloomberg Bloomberg Screentime: The entertainment landscape is shifting rapidly. Cable empires are crumbling, streaming giants face new challenges and innovative forces are on the rise. Join Bloomberg's Lucas Shaw in Los Angeles on Oct. 9-10 for look at the future of media. Network with industry titans, immerse in live experiences and enjoy a curated collection of local eats. Get your tickets today. [Learn More](. 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