Venture Capital Investors often ask which company/industry will be the "next target" for Amazon to disintermediate. On May 17th Amazon Prime Now launched restaurant delivery in Manhattan. Through this service, Amazon Prime members (using the Prime Now App) are able to enjoy free restaurant delivery from 350 restaurants. This is a new competitor and threat to GRUB given we estimate New York represents ~70% of adjusted EBITDA . That said, for now Amazon's offering does not seem differentiated enough to materially displace
GRUB HUB
As in other e-commerce models, we believe selection (broad and unique) matters to driving user growth and conversion. While its
early, Amazon's Prime Now offering is still behind GRUB. For perspective, Amazon launched with 350 restaurants in New York...which is 4.5% GRUB's ~8,000 total restaurants in the NYC Area. While Amazon has some unique inventory and access to higher-end chains ? such as Le Pain Quotidien ? we estimate that 70% of Amazon's Prime Now restaurants are also available on GRUB. This lofty overlap, in our view, speaks to the difficulty in obtaining unique supply in Manhattan, where many restaurants already offer delivery.
It is also important to remember that Amazon's Prime Now product is also still very small, as we estimate that the app has only been downloaded ~3.8mn times cumulatively in the US over the past 2 years. This is 60% of the total GrubHub app downloads over that period...and still only an estimated 12% of total Amazon Prime subs.
