Amazon.com Inc. on Tuesday fired another salvo in the online grocery arms race by making Amazon Fresh’s 2-hour fresh food delivery service free for members of its Prime loyalty program if they hit a minimum order threshold, which varies based on the market. For example, in Chicago it is a $35 purchase minimum (there is a flat $4.99 fee for orders less than $35 for 2-hour delivery). Prime members can also choose to receive 1-hour delivery for a flat $4.99 fee if they hit a minimum threshold (there is a flat $9.99 for orders less than the threshold).
The retailer says Amazon Fresh and Whole Foods Market delivery services are now available in nearly 2,000 cities. Amazon also is making its local Whole Foods inventory available online and in the Amazon app.
Previously, Amazon charged consumers a $14.99 monthly fee for the program. Current Fresh subscribers can immediately receive their groceries for free while Amazon Prime members who haven’t purchased via Amazon Fresh before will have to register their interest on Amazon and wait for an invite.
“Grocery delivery is one of the fastest-growing businesses at Amazon, and we think this will be one of the most-loved Prime benefits,” says Stephenie Landry, vice president of grocery delivery at Amazon, No. 1 in the Internet Retailer 2019 Top 1000.
The move comes on the heels of Amazon’s acknowledgement that its push to transform Prime into a one-day delivery service is costlier than expected, and that it expects to spend roughly $1.50 billion on the initiative in the fourth quarter.
“This new delivery effort is yet another example of Amazon’s willingness to suffer short-term for the potential for long-term benefit,” says Charlie O’Shea, a Moody’s analyst who covers Amazon.
Making Amazon Fresh free to Prime members also comes amid growing competition from other large merchants. For example, Walmart in June rolled out Delivery Unlimited, which offers unlimited grocery deliveries for a $98 annual fee or a monthly $12.95 fee. And Target offers free fresh food deliveries on orders that exceed $35 to subscribers of its Shipt service, which is Target’s $99 annual fee delivery service .Favorite