Timing is everything, as it turns out.
Yesterday, I wrote a piece that posited that one of Amazon’s untapped areas of expansion would be to leverage Whole Foods, its prepared foods business and kitchen capacity, its Prime Membership base, its logistics capabilities to create virtual brands that would move them more directly into the “food” category. It seemed to make sense given Amazon’s success historically in leveraging its platform assets to disrupt and redefine adjacent sectors. Grocery, the one area in which Amazon lacks critical mass, and restaurants, an experiment that never gained traction, seemed perfect for disruption, and the Amazon way.
Today, with Amazon’s announcement of its partnership with Grubhub, the Prime benefit that it will offer and the stake in the business Amazon will get as a result, seems a clear indication to me that this is the direction they intend to pursue.
Grubhub is a distressed asset in need of a second life, and Amazon a platform in need of new ways to capture more of the consumers “share of stomach.” As I wrote yesterday, one of the most dynamic and lucrative ecosystems is that which integrates how consumers find, pay for and eat their food. The bright lines that once separated grocery and restaurant are blurring rapidly as grocery stores offer prepared foods and restaurants perfect delivery and expand takeout. Amazon and Whole Foods have the potential to erase those lines completely as consumers simply think about eating — and use their “eat” platform to find many different options for how to do that.
Giving Prime Members free Grubhub membership for a year eliminates one friction to using it for delivery — anytime. We’ll see if the launch of virtual brands on the platform, and the interest on the part of Amazon and Whole Foods to expand their ghost kitchen model to complementary brands, gives them enough of an incentive to use it.
The business case for why I thought it made enough sense to write about it yesterday can be found here.