Amazon is reheating the heat in the food world, and in particular the delivery of groceries to make its services more attractive to competitors than Walmart, as well as multiple suppliers of companies such as postal colleagues. Today, the company announced that it will make Amazon Fresh, the fresh food delivery service it now offers in about 2,000 cities in the US and elsewhere, be used free of charge for Prime members, removing the $ 14.99 per month fee, which has been charged for the service so far.
Along with free shipping, Amazon provides consumers with a one and two-hour delivery option for faster turnovers and makes local high-value food inventory available to consumers online and through the Amazon app.
Core members who were already using Amazon's grocery delivery services ̵
"The core members love the convenience of free grocery delivery on Amazon, which is why we did Amazon Free Prime Benefits Save Customers $ 14.99 Per Month, ”said Stephenie Landry, Vice President of Food Supply, in a statement. "Grocery delivery is one of Amazon's fastest growing businesses, and we think it will be one of Prime's most beloved benefits."
Delivering Amazon Fresh is the latest pricing (and discount), what Amazon has done is encourage more use of food while expanding the sweeteners it gives consumers to sign up for Prime. The $ 14.99 per month charge was introduced in 2016, itself a reduction of the $ 299 per year fee that Amazon previously charged Amazon Fresh customers. Previously, Amazon charged $ 99 a year plus individual shipping fees to use the service.
It is unclear how many customers are already using Amazon Fresh, or whether the service is profitable, not for the company at this time. It is noteworthy that despite efforts by Amazon owning Whole Foods supermarket chain, analysts earlier this year estimated that while Amazon was still monitoring food growth, this growth was slowing. (To add to this, we have seen some consolidations that point to Amazon looking for ways to simplify – and reduce the cost of – grocery supply.)
However, in the US, about a year ago it did in a separate report Amazon has been estimated to account for about one-third of all US food supply.
Grocery delivery is a difficult business, much less pervasive than delivering a book or piece of clothing or a piece of consumer electronics, but, if done correctly, is often a recurring revenue line. In addition, Amazon has made fast and free shipping one of the cornerstones of how it grows its business and draws customers away from using other online shopping options or visiting actual brick and mortar stores.
In other words, whether profitable or not, it makes sense for Amazon to invest in ways to try to enhance its grocery delivery service by doing it for free as perhaps the biggest push ever (next stop : money back when you use it?). It fits in with the more general approach of saving the scale of the company: attracting more consumers who buy more groceries and offsetting the margins of the latter to offset losses from the former.
But the move to make deliveries "free," that is, for those who are already paying $ 12.99 / month or $ 119 / year for Amazon Prime – is a classic move for Amazon, not just for increasing its own numbers to use the service.
The company faces constant competition from a number of other companies that also offer online shopping and grocery delivery. In the UK, almost every major food chain offers this service directly (or through another non-Amazon partner). And in the US, Walmart only announced last month that it would expand its $ 98-a-year delivery service, an unlimited deal that would still be a cheaper deal today than Amazon's. Both postal staff and Doordash are among the delivery hopes that also have ambitions to make a dent in this area.