Amazon is now offering shoppers in more than 1,000 cities free, same-day delivery of groceries — including perishable goods such as milk, seafood, frozen items and fresh produce. The company plans to expand the service to an additional 1,300 cities by the year’s end.
In most areas, the deliveries are free for Prime members for orders that cost more than $25. If the purchase is below that amount, the cost is $2.99. For shoppers without a Prime membership, the delivery tacks on a $12.99 fee.
The same-day grocery ordering is integrated into the regular shopping that consumers use for other household purchases with a quick turnaround. Amazon began testing the service last year, announcing an initial trial in Phoenix in October.
GeekWire tested the service in Seattle in June, adding apples, cucumbers and blueberries to a late-night order that included a memory card and dishwasher detergent. All of the items arrived the next morning — non-grocery items in one package, groceries an hour later in an insulated package.
Grocery items that need to be chilled or frozen come from fulfillment sites with temperature-controlled areas. The company said the insulated bags are recyclable in most curbside recycling programs.
Amazon has for years been expanding and experimenting in the grocery store space. In 2007, it started offering grocery deliveries in Seattle through Amazon Fresh, then offered Amazon Fresh grocery pick-up sites and eventually started opening Amazon Fresh grocery stores beginning in 2020. It also acquired the high-end grocery Whole Foods Market in 2017.
Amazon said the same-day service is proving popular in cities where it’s already been available, leading to more frequent purchases and increased shopping with Amazon Fresh and Whole Foods Market.
“Many of these shoppers were first-time Amazon grocery customers who now return to shop twice as often with Same-Day Delivery service compared to those who didn’t purchase fresh food,” Amazon said in a release. “What’s more, early adoption in these regions showed the popularity of groceries among Prime members, with strawberries now consistently knocking AirPods out of the top 5 best sellers of all products sold…”
However, a test of the service this morning from Seattle offered a hodgepodge of sources for the goods and a range of delivery costs. Searching the site for “produce” and “get it today” delivery offered bananas through Amazon Fresh, which required an order of more than $50 for free delivery; avocados from Whole Foods Market that added a $9.95 fee for delivery; and dried cranberries from Prime that would arrive at no additional cost between 10 a.m. and 3 p.m.
News of the expanded delivery service caused stock prices to dip for other companies offering grocery deliveries. Instacart’s stock was down close to 11%, while Walmart slid nearly 2%.
“Amazon.com’s latest move to grow food share by offering free same-day delivery of groceries, in tandem with core products for Prime members, could pull some on-demand orders away from rivals like Walmart and Kroger as its $25 minimum order undercuts theirs,” Bloomberg Intelligence analysts Poonam Goyal and Anurag Rana told Bloomberg.
Added analysts from Wedbush Securities: “The reason this announcement is so significant is that Amazon has yet to displace incumbents in the grocery category, at least for perishables. Grocery is the biggest retail category and still relatively untouched by the internet.”
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