True to form, Amazon is cutting prices and speeding up delivery. The ecommerce giant is nixing its $14.99 monthly Amazon Fresh delivery fee, instead offering free 2-hour grocery delivery in more than 2k cities.
Compared with its free Whole Foods delivery offering — which has yielded “relatively little fizz” in terms of market share — the Fresh option promises wider reach, speedier turnaround, lower prices, and more large-brand items. It’s only available to paying Prime members ($119/year), so take the “free” part with a grain of pink Himalayan sea salt (available for delivery!).
Amazon is hungry for more high-frequency shoppers
Amazon may have mastered hardgoods, but perishables are a whole different meatball game, thanks to unpredictable seasonal events and high shipping/packaging costs. Although the ecomm king has a relatively strong footing in the rapidly growing online grocery market, competition is growing fiercer.
Food fiiiiiiiight! Every man for himself!
The market is stuffed with competitors jockeying for a seat at the table via price cutting, customer service, and partnerships (e.g., Target and Shipt).
Many traditional groceries now offer order-ahead pickup as well as delivery, and 3rd-party grocery drop-offs like Instacart are proliferating. Last, we can’t discount adjacent services including meal-based subscriptions (e.g., HelloFresh) and restaurant delivery platforms (e.g., DoorDash).
But the big dawg can afford to invest in the long game
Thanks to its many alternate revenue sources, Amazon can eat the high delivery costs and lower margins incurred by its latest Fresh offering — no sweat. Plus, each new Fresh customer it wins means another loyal Primer who will go on to pay annual fees and shop Amazon’s other categories.