After Amazon’s nearly $14 billion proposed merger of Whole Foods, the retail giant may have its sights set on Grubhub next.
In a note Monday (June 19), Wedbush senior tech analyst Aaron Turner proposed that Grubhub’s delivery networks could help Amazon solidify its desire to get food deliveries to customers in a matter of hours. Since Grubhub’s major delivery areas are usually in areas where Whole Foods stores are also located, Amazon could take advantage of Grubhub’s delivery network and crew during “non-peak meal times” to get groceries to customers more quickly. Furthermore, Turner explains that Grubhub could also serve as a nice compliment to Whole Foods because both have similar customer and diner demographics.
By using the same “infrastructure” for restaurant delivery, grocery delivery, and Prime Now same-day delivery, Amazon would be able to cut down on shipping costs. Amazon wouldn’t be the only one to benefit from the deal either. By getting access to Amazon’s Prime members, Grubhub would be able to gain new users and quickly expand into new cities.
Turner estimated that Amazon could offer $55 a share for Grubhub – a price that would come to about $4.5 billion, roughly a third of Amazon’s price for Whole Foods. Investors, however, seemed to take his speculative Amazon-Grubhub deal seriously, pushing the online food ordering company’s shares up 4.3% in trading on Monday.
Not everyone is certain that Amazon will take over Grubhub next. John Blackledge, a senior internet analyst at Cowen & Co., told CNBC that he thinks Amazon will focus on the Whole Foods deal for now. They will be dealing with “integrating it and really attacking what is the biggest retail market in the U.S., which is grocery,” Blackledge said.
Danita White for TechFunnel.com