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Amazon Rolls Out Local Food Takeout Business

E-commerce giant Amazon.com Inc. (AMZN) recently unveiled a new food takeout service in a move to further expand its Amazon Local services. The food takeout business was launched in Seattle and will gradually be offered globally.

The new offering was made available as an app on Apple’s (AAPL) iPhone, but was reportedly withdrawn due to a bug. The service should be available again soon. The new service will be in direct competition with companies like GrubHub (GRUB), DeliveryHero and Seamless and is expected to attract more customers for Amazon.

The market for takeaways is booming as on-the-go consumers increasingly look for quick meal solutions. However, information is scarce as to how Amazon plans to expand this service. For instance, it is still unknown which restaurants Amazon will tie-up with. But it will surely face tough competition in Seattle, where delivery services like Postmates, Caviar and Eat24 already deliver food at the doorstep. Reportedly, Amazon might carry out acquisitions for expansion.

In addition, it can also gain traction with local merchants by approaching service companies as well as startups in Seattle that already connect service providers.

Services are a new area for Amazon, which has concentrated so far on selling products to increase its dominance in everything from books to groceries to electronics. It has been striving to beef up its delivery system in order to provide better customer service. Local services are huge and expanding, but it has been difficult for marketplace companies to spin out profit since the services must be tailored to suit each city or region.

In relation to these efforts, Amazon had plans to develop a drone-based delivery service where it will deploy airborne robotic drones to deliver packages to consumers in 30 minutes. However, Amazon’s drone dreams will have to wait as according to the guidelines unveiled by Federal Aviation Administration (:FAA), commercial drone delivery to people for a fee remains illegal for now.

Amazon currently holds a Zacks Rank #4 (Sell). Broadcom Corp. (BRCM) is a better-ranked stock with a Zacks Rank #1 (Strong Buy) and therefore worth considering.

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