Amazon has seen strong traction in some areas of its online grocery business but has struggled in its delivery of fresh foods through Amazon Fresh (the grocery delivery and pickup service launched in 2007). Groceries sales for the e-commerce behemoth grew by about 45% in 2018 compared to 2017 (down from a 60% 2016-2017 growth rate). Of the nearly $3bn Amazon grocery sales, nearly half fell under the coffee and cold beverages category and non-perishables (snacks and cereal).
However, the company has continued to invest in its grocery delivery business with added benefits for online shoppers including reduced free delivery times from two days to one day for Prime members.
“Prime members love the convenience of free grocery delivery on Amazon, which is why we’ve made Amazon Fresh a free benefit of Prime, saving customers $14.99 per month,” said Stephenie Landry, VP of grocery delivery. “Grocery delivery is one of the fastest growing businesses at Amazon, and we think this will be one of the most-loved Prime benefits.”
Amazon Fresh grocery delivery is now available in more than 2,000 cities and towns, and the e-commerce giant said it will continue to expand its delivery and pickup services to more markets.
Good timing ahead of high traffic holiday season
According to Edge by Ascential VP of global executive education, Chris Perry, Amazon dropping the delivery fee is well-timed for the upcoming holiday season when consumers spend more on groceries.
"Amazon is tripling down on grocery in advance of the holidays, one of its highest traffic seasons. This grocery delivery fee elimination is just one of multiple moves they’ve made recently to capture market share in this space, including the expansion of Same-Day and One-Day delivery, the removal of Add-On and Exclusively for Prime item designations, the removal of the additional Prime Pantry subscription fee, the expansion of Amazon Fresh into three new US markets, the rollout of 2-hour delivery from Whole Foods to over 30 markets and more," Perry said.
"By removing barriers for trial and repeat and adding immense value among such a large population of loyal Prime Members, not to mention leveraging a naturally high traffic season to maximize visibility and consideration, Amazon is setting itself up to jump its market share baseline and leadership position heading into 2020."
This has huge potential for US and will undoubtedly be leveraged in the UK to advance its position there amidst greater online grocery penetration and more competition, once proven and confirmed in the US," Perry added.
