Online food M&A activity leads ‘marketplacing’ trend as retailers seek their share of the ‘Amazon Economy’

By Paul Skeldon March 13, 2018 - 6:29 am

Amazon’s move into grocery delivery with the $13.7 billion acquisition of Whole Foods Markets in 2016 has caused a tsunami of mergers and acquisitions (M&A) across the grocery and food delivery marketplace market, as disruptors jostle to grab a share of this huge new sector.

In an age where anything – from screws to private jets – can be purchased through marketplaces, the likes of GrubHub and Deliveroo to Amazon, JustEat, UberEats and Ocado, are all attempting to transform the business of delivering restaurant, takeaway meals and groceries directly to homes and many online platforms are aggressively acquiring each other in the race to capture market share at home and abroad.

Meanwhile new online food strategies, demonstrated by the rise in meal kits provided by the likes of Blue Apron and HelloFresh, are increasing consumer’s choices, providing more convenient options than ever before and promising a new wave of future consolidation online, and contraction and failure offline.

According to Hampleton Partners, an international technology mergers and acquisitions advisor, in its E-Commerce M&A Market Report, Amazon‘s counter-cyclical acquisition of Whole Foods has driven a chain reaction of acquisitions, for instance, Walmart’s purchase in quick succession of ShoeBuy, Moosejaw, Bonobos, Parcel, Hayneedle, ModCloth and Spaitaland.

Over the past 30 months, the most active acquirer in the online food sector was Minnesota-based food retailer Bite Squad, which consumed 17 online food delivery companies to propel it to the top place, including Café Courier Ohio and  256ToGo.

UK-listed takeaway food app, Just Eat, and Chicago-based online food ordering company, GrubHub, took joint position as the sector’s third most active buyer, with eight acquisitions each.

“We expect Amazon to continue its M&A spending spree throughout 2018, expanding into and disrupting other online consumer service segments such as financial services, and we’re watching closely how other big online players like Alibaba, Walmart/Jet, Flipkart and OTTO will react.”

Ralph Huebner, digital marketing and e-commerce sector principal, Hampleton Partners

However, the shake up is not limited to food and grocery, but is starting to be seen across the ecommerce and wider retail landscape as retailers look for new ways to reach markets and as disruptors attempt to ‘Amazon-ise’ other retail segments – something that again reinforces why retailers and brands need to have an active and diverse marketplace plan as part of their omni-channel strategy.

The continuing high growth rate of online retailing  and consequent declining footfall is increasing pressure on traditional retailers and their suppliers. As bricks-and-mortar businesses also continue to struggle with rising rents and hefty business rates they need to turn to M&A quickly to not just remain competitive, but to  stay alive.

“Recent high street and big box failures such as Maplin’s and Toys R Us demonstrate clearly that standing still is not an option.”

Ralph Huebner, digital marketing and e-commerce sector principal, Hampleton Partners

In addition to food delivery consolidation, Hampleton’s E-Commerce M&A Report identified that disruptive companies offering Artificial Intelligence; voice search services; analytics and measurement; logistic solutions and freight capacities are all high priority targets for acquirers looking to improve their e-commerce performance and efficiency.

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