Online retailer Amazon Inc said on Tuesday it will begin offering its own restaurant delivery service to Prime members in Seattle, marking its first push into an increasingly crowded market for meal delivery known for razor-thin margins.
Amazon customers will be able to order food from dozens of restaurants in the Seattle area using the company's Prime Now app - with the delivery service coming at no extra charge.
Prime Now, launched last December in New York, promises one and two-hour delivery of tens of thousands of products and the new meal service is another way to add value to Amazon's $99-a year Prime membership program, a core growth area for the company. Analysts estimate that there are more than 40 million Prime members worldwide.
The e-commerce company has dabbled in restaurant services in the past, allowing customers to order food through its platform Amazon Local, but those deliveries were handled by the merchants themselves.
Amazon's decision to use its own fleet of drivers to carry out meal deliveries pits it against established players like GrubHub Inc as well as newer rivals like Uber, which has expanded its own meal delivery service in cities like San Francisco and Austin.
Gus Lopez, general manager of Amazon Restaurants, told Reuters customers will be able to order food from restaurants without paying additional service or delivery fees, while restaurants will get access to Amazon's delivery network. Amazon will take a cut of profits from orders received by partner restaurants.
"We are going to learn a lot from starting in Seattle - an important part of the customer experience is having a range of selection from quality restaurants," said Lopez. Amazon declined to say when it planned to expand the service to new markets.
Amazon has been hiring staff for a division dedicated to restaurants in Seattle and New York, according to a Reuters search of LinkedIn and company's job postings. Several open job postings indicated that the company is interested in rapidly expanding meal delivery services across the country.
Amazon said locations mentioned in recent job postings did not necessarily indicate new markets slated for an expansion to restaurant food delivery services.
Prime Now is currently available in 11 markets including Chicago, Atlanta and London.
© Thomson Reuters 2015
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