Amazon is bringing same-day delivery of fresh foods like meat, eggs, and produce to more than 1,000 U.S. cities and towns, with plans to expand to at least 2,300 locations by the end of the year.
The move follows a successful test pilot in Phoenix, Orlando, and Kansas City last year, where it found that shoppers frequently added strawberries, bananas, avocados and other perishable groceries to their non-grocery orders. Amazon also found that these first-time Amazon grocery customers now return twice as often compared to those who didn't purchase fresh food.
Here's how Amazon promises to deliver top quality groceries:
- It runs a specialized temperature-controlled fulfillment network.
- Every item undergoes a six-point quality check upon arrival and before leaving for delivery.
- Temperature-sensitive products are delivered in insulated bags that are recyclable in most curbside recycling programs.
- Your Amazon driver hasn't had a break all day to ensure that you get your precious blueberries in time for your afternoon snack.
Doug Herrington, CEO of Worldwide Amazon Stores, said:
“By introducing fresh groceries into our Same-Day Delivery service, we’re creating a quick and easy experience for customers. They can order milk alongside electronics; oranges, apples, and potatoes with a mystery novel; and frozen pizza at the same time as tools for their next home improvement project—and check out with one cart and have everything delivered to their doorstep within hours.”
The service is free for Prime members on orders over $25 in most cities (for now), or costs $2.99 if an order falls below that threshold. Non-Prime members pay a $12.99 fee to use the service, regardless of order size.
My prediction is that Amazon is going to go the Prime Video route by including the same-day grocery delivery initially with your exiting Prime Membership to get you hooked, and then make it a premium add-on down the road. Originally when Amazon started offering perishable grocery orders, they were fulfilled through Amazon Fresh or Whole Foods Market, but Prime members had to pay an additional $9.99/month to receive free delivery on orders that totaled more than $35, so assumably they will eventually lean back towards that model.
The market reacted: Instacart, Kroger, Albertsons, and DoorDash stock fell 11%, 4%, 2%, and 3% respectively following the announcement. Even Walmart stock slipped 2%. Everyone's afraid of the big bad wolf who just showed up to your front door with fresh produce.
Amazon has been chasing the grocery category for quite some time. In the book Winner Sells All, Herrington, explained the appeal of the grocery category:
“Selling a book or a TV is great and super helpful, [but] how many times do I buy a book or TV each week versus how many times do I buy a packaged goods item, or some toilet paper or some food?”
Here's a very consolidated history of Amazon's grocery efforts:
- 2006 – Amazon debuts its first online grocery storefront focused on non-perishables
- 2007 – Amazon pilots Amazon Fresh to deliver perishables and fresh produce
- 2017 – Amazon acquires Whole Foods for $13.7B
- 2016-2018 – Amazon Go cashierless stores move from pilot to public launch, introducing “Just Walk Out” technology
- 2018 – Whole Foods delivery via Prime Now rolls out to multiple U.S. markets
- 2019 – Amazon Fresh delivery fee dropped for many Prime members
- 2020 – First Amazon Fresh physical grocery store format
- 2022 – Amazon closes / rebrands Amazon Go Grocery, shifting focus to Fresh stores
- 2025 – Amazon puts Whole Foods, Amazon Fresh, and Amazon Go under one leader, Jason Buechel (former Whole Foods CEO)
- Today – Amazon launches same-day delivery of perishable groceries to more than 1,000 U.S. cities