Six months after buying Whole Foods Market Inc. and its fleet of about 460 grocery stores for $13.7 billion, Amazon.com Inc. is beginning to show how it will maximize its assets. Amazon announced today that consumers in four markets can order groceries from Whole Foods and have them delivered for free in two hours via Prime Now, Amazon’s expedited delivery service, available only to Prime customers. Amazon says it plans to expand the Whole Foods/Prime Now service across the United States this year.
Prime members must buy $35 worth of goods per order to use the service, which is the standard minimum order to use Prime Now for any type of product. Customers that want delivery in an hour or less pay a $7.99 delivery fee. This buying option is now live to customers in Austin, Texas, Cincinnati, Dallas and Virginia Beach, Va.
“We’re happy to bring our customers the convenience of free two-hour delivery through Prime Now and access to thousands of natural and organic groceries and locally sourced favorites,” said John Mackey, Whole Foods Market co-founder and CEO.
Orders placed for Whole Foods groceries through Prime Now will be picked from Whole Foods stores, not from Amazon’s network of Prime Now delivery hubs or Whole Foods distribution centers. At last count, Amazon has 53 Prime Now delivery hubs in the United States. These delivery centers are a fraction of the size of its major fulfillment centers,
ranging in size from about 30,000-40,000 square feet. As of August, Prime Now delivery was available in 34 U.S. metropolitan areas. Whole Foods has 12 regional distribution centers.
As of January, 55% of U.S. households have a Prime membership, according to an Internet Retailer survey of 500 U.S. internet users conducted by Toluna, a survey firm. A Prime membership costs $99 annually and gives members access to fast delivery options, streaming video and music and other benefits.
The percentage of consumers who buy groceries online is expected to grow significantly in 2018, and more than half of online grocery shoppers are likely to try buying them from Amazon, according to a survey of 1,000 U.S. consumers from online grocery technology firm Unata and order fulfillment platform ShopperKit. That survey says 36% of consumers plan to shop online for groceries this year, up from 22% in 2017 and 19% in 2016.
Of those surveyed, 42% of those who grocery shopped online in 2017 did so with their local grocers, 34% ordered from Amazon and 32% chose Walmart.com. Other choices included Instacart (12%), Peapod (8%) and FreshDirect (6%).
Looking ahead, the survey shows that shoppers are interested in buying food from Amazon. Among online grocery shoppers surveyed by Unata and ShopperKit, 54% are likely to try ordering Whole Foods items through Amazon.com in 2018, and 54% are likely to buy an Amazon Prime membership to save money at Whole Foods.
Since Amazon bought Whole Foods in August, it has added lockers to most Whole Foods stores where consumers can have their Amazon.com orders delivered and pick them up at their convenience. Amazon has also begun to offer Prime members special pricing on some products at Whole Foods. For instance, under a current promotion, Prime members pay $19.99 for two dozen roses at Whole Foods. Whole Foods customers who aren’t Prime members pay $24.99. Amazon says it is working to integrate its Prime program to Whole Foods’ loyalty program. For now, though, Amazon Prime customers who want to get the discounted roses have to show a coupon available on Amazon at checkout.
Amazon is No. 1 in the Internet Retailer Top 1000.
Additional reporting from James Melton.