Amazon targets Uber Eats with Deliveroo investment - The Verge

Amazon lead a $575 million funding round in the UK-based food delivery company Deliveroo, continuing its efforts to diversify into the takeaway market. In a press release Deliveroo said it would use the money to expand its UK engineering team, expand its delivery reach, and continue to develop new products such as its delivery-only kitchens. Deliveroo currently operates in 500 towns and cities across 14 countries and territories.

The investment will intensify Amazon’s competition with rival tech company Uber and its Uber Eats service. The Financial Times reported last year that Uber was interested in buying Deliveroo outright, but that talks stalled after the two companies failed to agree on a valuation. Sky News reports that Amazon’s investment in Deliveroo follows two unsuccessful approaches to buy Deliveroo outright.

This isn’t Amazon’s first foray into the food delivery market. It launched its own takeaway service, Amazon Restaurants, in the US back in 2015, and expanded it to the UK the following year. Just over two years later, however, it shut down the service in the face of stiff competition from the likes of Uber Eats and Deliveroo.

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2019-05-17 08:10:39Z
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Amazon invests in UK restaurant delivery service Deliveroo - CNN

Deliveroo announced Friday that it had raised $575 million in an investment round which adds the US tech giant to its list of investors.

"Amazon has been an inspiration to me personally and to the company, and we look forward to working with such a customer-obsessed organisation," Deliveroo CEO Will Shu said in a statement.

The London-headquartered delivery platform, which operates in 14 countries and territories around the world including Australia, France and Germany, said it has now raised more than $1.5 billion since it was founded in 2013.

The funding round also included some of Deliveroo's previous investors such as T. Rowe Price (TROW), Fidelity and Greenoaks, it said.

Amazon already has a presence in the food delivery space with its website's "restaurant" section and AmazonFresh Grocery, but the investment into Deliveroo will further expand its global reach.

The US firm has been "impressed with Deliveroo's approach, and their dedication to providing customers with an ever increasing selection of great restaurants along with convenient delivery options," Amazon UK Country Manager Doug Gurr said in a statement.

Deliveroo, which competes with companies such as GrubHub (GRUB), Door Dash and Uber Eats, said it will use the new investment to grow the engineering team at its London headquarters, develop new products and expand its delivery reach.

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https://www.cnn.com/2019/05/17/investing/amazon-investment-deliveroo/index.html

2019-05-17 06:56:00Z
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Amazon leads $575 million investment round for food delivery company Deliveroo - CNBC

Amazon is leading a $575 million funding round for Deliveroo, taking the total the food delivery app has raised to date up to $1.53 billion.

Others taking part in the funding round include existing investors T. Rowe Price, Fidelity Management, and Greenoaks.

Deliveroo is a British company that allows users to order food deliveries from nearby restaurants using an app. Its U.K. rivals include Uber Eats and Just Eat, but the firm operates across 14 markets including Australia, Germany, Hong Kong and the UAE.

Deliveroo said in a press release Friday that it would use the funding to grow its engineering team in its London headquarters and expand its delivery reach to offer its service to new customers. Will Shu, founder and CEO of Deliveroo, said in the press release that the new investment would offer restaurants new opportunities to grow and expand their businesses.

"Amazon has been an inspiration to me personally and to the company, and we look forward to working with such a customer-obsessed organization," he said. "This is great news for the tech and restaurant sectors, and it will help to create jobs in all of the countries in which we operate."

In December, Deliveroo, which grew by 116% globally in 2017, opened its first brick-and-mortar restaurant in Hong Kong. Deliveroo Food Market serves as a kitchen for delivering online orders as well as a consumer-facing storefront where consumers can choose from 15 dining concepts.

At the time, the company said it would expand the concept globally if all goes well, but it already had plans to open a second location in Singapore this year.

British newspaper The Daily Telegraph reported late last year that Deliveroo is eyeing a 2020 IPO, quashing rumors that a takeover deal from Uber was in the works.

Seema Shah, global investment strategist at Principal Global Investors, told CNBC's "Squawk Box Europe" on Friday that services like Deliveroo – which "technified" traditional industries – had significant long-term potential.

"The problem that they face is that there's so many competitors coming in – all of these large tech companies are developing other technologies that can enable them to do similar stuff, so I think it's going to be tough going forward," she said. "But there's so much interest, especially when you think about the millennial contingent that's coming through – that's the only way that they're going to be operating."

However, Deliveroo has faced similar issues to Uber when it comes to sentiment among its employees. In June last year, a group of 50 U.K. workers won a six-figure payout from the firm in a settlement of an employment rights claim. The claim alleged the riders were denied rights such as the legal minimum wage after being given contractor status instead of classified as employees.

In December, the tide turned in Deliveroo's favor when it won a case in Britain's High Court, which rejected claims that categorizing riders as self-employed breached their human rights.

- CNBC's Uptin Saiidi contributed to this report.

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2019-05-17 06:45:02Z
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Uber wanted to IPO with a $120 billion valuation but ran into trouble when some of its biggest shareholders held out for a lower price - Business Insider

Uber CEO Dara Khosrowshahi, left, and Ryan Graves, a board member, at the Uber IPO last week.AP/Richard Drew

• Uber wanted to go public with the $120 billion valuation pitched by bankers at Morgan Stanley and Goldman Sachs ahead of its IPO, but the company ultimately listed with a $75.5 billion market cap.
• One reason is that institutional investors, many who privately owned Uber stock, didn't want to buy more shares at the higher price, according to The New York Times.
• Uber had taken more than $10 billion from institutional investors and private equity firms, among other investors, according to the report. Many bought their Uber shares at valuations below $61 billion.
• So it wasn't an easy pitch to get the same institutions to buy more stock at nearly twice the price, according to the report.
• Read more on the Business Insider homepage.

Uber's mega IPO would have been even bigger if it weren't for institutional investors.

The ride-hailing company, which went public last week with a market cap of $75.5 billion, initially tried to garner a $120 billion price tag in its IPO. That's the valuation bankers at Morgan Stanley and Goldman Sachs pitched to the company at the start of the process.

The Wall Street Journal reported that figure in October, and it held shape until April, when the company told investors it would aim a little lower at a valuation of $100 billion.

The problem: many of the institutional investors who would have bought large amounts of Uber in the IPO already owned shares through private funding rounds. And those investors were resistant to buying more shares at nearly twice the valuation they had intitially invested, according to The New York Times.

Since 2009, Uber had taken more than $10 billion in funding from mutual funds and private equity, among others, according to the Times. Asset managers such as T. Rowe Price, Vangaurd Group, and Tiger Global Management helped the ride-hailing company raise a $5.6 billion round in 2016 at a valuation of $61 billion.

Those are the same investors who usually buy large allocations during the IPO, which means in many cases, selling Uber's public shares meant selling its stock to its existing investors.

But it wasn't just the price that was an issue. The Times reported that slowing growth led some investors to suggest that Uber was priced too high. 

Read more: UiPath raises $568 million in new funding at a mega $7 billion valuation, making it the most valuable artificial intelligence startup in the world

As the biggest IPO of the year, Uber's public offering was highly visible. But it's not the only high-growth tech startup to take investments from institutional investors.

As high-growth companies stay private for longer, investors such as Fidelity and Dragoneer Investment Group have led more private funding rounds so that they can get more shares at a cheaper price than is often possible after an IPO.

Slack, which is set to IPO in a direct listing in the upcoming weeks, raised $427 million at a $7 billion valuation in 2018 in a round led by Dragoneer Investment Group, along with its existing institutional investors T. Rowe Price and Wellington Management.

UiPath, a private artificial intelligence company, completed a similar round in April, where it raised $568 million at a $7 billion valuation in a round led by the hedge fund Coatue.

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2019-05-16 15:10:26Z
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Walmart says it will raise prices because of tariffs - CNN

"We're going to continue to do everything we can to keep prices low. That's who we are. However, increased tariffs will lead to increased prices, we believe, for our customers." Walmart chief financial officer Brett Biggs told reporters on a call after the retailer reported earnings for the first quarter of 2019.

Biggs did not say which items will become more expensive at Walmart. He noted, however, that Walmart's merchant teams have been developing strategies to mitigate cost increases and working with its suppliers to manage prices.

Walmart has less exposure to China than many other retailers because more than half of its sales come from groceries. Most of the food Walmart sells comes from the United States and other regions such as South America.

But Walmart (WMT) still imports 26% of its merchandise from China, UBS analyst Michael Lasser estimated in a report earlier this week. Target (TGT) imports 34% of its products from China. Other companies, including sporting goods, auto parts and furniture sellers, have even greater exposure to China.

Last week, the Trump administration hiked tariffs on $200 billion of Chinese-made goods. The tariffs mostly hit industrial materials and component parts, but also applied to luggage, hats and gloves for US importers.

Additionally, the United States has started a formal process to put new tariffs in place on the remaining exports coming from China that aren't already taxed. That could make a number of goods, including toys, clothes and sneakers, more expensive for American consumers.

Retailers depend heavily on China in their supply chain. China accounted for about 41% of all apparel, 72% of all footwear, and 84% of all travel goods imported into the United States in 2017, according to a letter several retail trade groups sent to the Trump administration last week.

Other retailers have also recently warned that tariffs will hit their businesses.

On Wednesday, Macy's said it will raise prices on some merchandise because of the trade war with China.

"If the potential fourth tranche of tariffs is placed on all Chinese imports, that will have an impact on both our private and our national brands," CEO Jeff Gennette told analysts on an earnings call. He said it would be hard for Macy's to "find a path" to avoid increasing prices on consumers.

Walmart is surging

Tariffs pose an obstacle for Walmart, one of the strongest retailers in the United States.

During its first quarter, Walmart's sales at US stores open at least a grew 3.4% compared to the same time last year. That marked Walmart's fourth-straight quarter of sales growth above 3% at stores open at least a year.

"The US business continues to benefit from a healthy economic environment," CFO Biggs said in a statement earlier Thursday.

Walmart's online sales growth clocked in at 37% last quarter, a tick down from the 40% rate online sales grew last year. Walmart has ramped up its online grocery business and acquired trendy fashion brands such as Bonobos and Eloquii. Online grocery pickup and delivery buoyed online sales, according to the company.

"We're pleased with how we started the year," CEO Doug McMillon said. "We have a stronger foundation in place with our stores, and we're making good progress in e-commerce."

One analyst Thursday attributed Walmart's strength to its decision to continue lowering its prices, despite higher costs and investments in remodeling stores and building out its online infrastructure.

"Shoppers are now becoming more price sensitive, which plays into one of Walmart's core strengths," Neil Saunders, managing director at GlobalData Retail said in a note to clients.

—CNN Business' Katie Lobosco contributed to this article.

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https://www.cnn.com/2019/05/16/business/walmart-earnings-stock-tariffs-trump-china/index.html

2019-05-16 14:36:00Z
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Walmart says tariffs 'will increase prices' for shoppers - CNBC

The biggest retailer in the world is warning another round of tariffs could hit consumers hard.

"As we have said before, our goal is to be the low-price leader," Walmart CFO Brett Biggs said Thursday, as the company reported first-quarter earnings. "We want to manage margins with customers and shareholders in mind. We have mitigation strategies that have been in place for months. But increased tariffs will increase prices for customers."

The White House on Monday evening released a fresh list for about $300 billion in Chinese goods that President Donald Trump has said he's contemplating hitting with tariffs as high as 25%. The list includes everything from clothing and sneakers to sporting goods and other accessories.

That's after the Trump administration raised tariffs to 25% from 10% on $200 billion worth of Chinese goods last week. But retailers, for the most part, scooted by unscathed, with many of the items impacted by that hike hurting agricultural workers more than anything else. Some consumer-related goods on that list included furniture and handbags.

Walmart says it's "monitoring" tariff discussions closely, "hopeful that an agreement can be reached."

The company sources about two-thirds of its good domestically, largely because of its massive food business. The remaining one-third of items comes from overseas, including from China.

Macy's CEO Jeff Gennette had similar remarks on Wednesday. He said it would be hard for Macy's to get to a place "where you don't have a customer impact" if the additional tariffs go into effect.

Another analyst has warned the tariff hike could cause "widespread" store closures.

Walmart shares were last up about 3% in premarket trading Thursday, after Walmart reported earnings that topped Wall Street expectations, but sales came up short.

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2019-05-16 12:49:56Z
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Walmart CEO: Autonomous-car delivery is part of our future - Yahoo Finance

Amazon’s recent reveal of free one-day shipping for all Prime members almost blew up the internet.

The real question is why is it a big deal? Amazon’s (AMZN) rival Walmart (WMT) is already shipping groceries same-day at 800 stores mostly through the use of independent contractors such as DoorDash and Roadie. By year end, Walmart expects to have this capability available to shoppers at 1,600 of its U.S. locations.

Walmart also just took the wraps off its own one-day delivery program this week.

So in other words, been there, done that Amazon. What’s next on the delivery front you ask? Walmart and autonomous vehicle delivery mixed with some drone action, says Walmart’s top executive.

“I think last mile [delivery] is going to be solved in a lot of different ways,” Walmart CEO Doug McMillon told Yahoo Finance in an interview at the company’s Arkansas-based headquarters. “We're developing the capabilities to be able to solve last mile in lots of different ways — I think autonomous, as it starts to happen, will be another interesting part of the puzzle.”

McMillon said Walmart will soon begin testing autonomous delivery in Arkansas.

Walmart’s venture into autonomous delivery arguably continues to garner little fanfare (beyond a home-run TV commercial this year featuring the autonomous Knight Rider car, KITT, venturing off to pick up groceries), but it should considering the speed in which tech savvy consumers are demanding their orders nowadays. In February, the company teamed up with logistics giant FedEx to test delivery via an autonomous robot. The robot looks like a giant cooler on four wheels.

Jimmy Fallon checks out FedEx's new delivery robot. This is the same one Walmart is working with. (Photo by: Andrew Lipovsky/NBC/NBCU Photo Bank via Getty Images)

The test with FedEx comes almost a year after Walmart inked a deal with Google’s Waymo self-driving unit in Arizona. Waymo’s self-driving cars essentially show up to take customers to the stores to pick up their orders and then back home.

“Recognizing that a significant portion of Waymo rides taken revolve around running errands, we partnered with Walmart to make shopping more convenient and to give riders savings on groceries that were ordered on Walmart.com," Amee Chande, chief commercial officer of Waymo, told Yahoo Finance. "We are proud to partner with businesses like Walmart to explore ways to further connect the community to businesses and to learn key consumer preferences like where people prefer to be dropped off and picked up when they go shopping."

Need for speedy deliveries

In the end, the world’s largest retailer — and others in retail more broadly — must find ways to deliver packages even more quickly with an eye towards profitability on those orders.

Autonomous shipping could be one part of the answer. And for Walmart, it could be a major part of the delivery equation in its war with Amazon seeing it can ship from thousands of stores.

Besides Whole Foods’s few hundred locations and 12 Amazon Go stores, Amazon has no physical store presence.

Not sold on autonomous delivery being the future? Then Walmart is also keen on pushing forward with a plan launched in 2017 to have its store workers deliver packages on their way home.

“We hope that our associates over time can do more delivery from their way home from stores. We keep trying to figure that out given the realities and the rules associated with that,” McMillon said.

Brian Sozzi is an editor-at-large and co-host of ‘The First Trade’ at Yahoo Finance. Follow Brian Sozzi him on Twitter @BrianSozzi

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2019-05-16 12:51:00Z
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