Amazon Expands Same-Day Delivery for Perishables
Amazon has announced that subscribers to its Prime service can now receive same-day deliveries for items like strawberries, milk, meats, and frozen dinners. This move, aimed at enhancing its competitivness against services like Walmart+ and Instacart, was revealed on Wednesday.
The same-day delivery feature is complimentary for Prime members, who pay $14.99 monthly or $139 annually, on orders exceeding $25. Non-members, however, will incur a $12.99 fee regardless of how much they purchase.
As of now, this service is available in over 1,000 cities across the U.S., including places like Phoenix and Raleigh, with plans to extend to 2,300 cities by year’s end. Previously, Prime grocery orders involving perishables were fulfilled through Amazon Fresh or Whole Foods, requiring an additional $9.99 monthly fee for free delivery on orders over $35. This new option integrates their logistics network, simplifying the process.
Blake Droesch, an analyst at eMarketer, noted that this significant expansion is particularly beneficial for Amazon’s vast Prime customer base since there’s no extra cost involved. Reducing the minimum order amount to $25 could pose a challenge for Instacart, allowing customers to make quick purchases which are typically a core feature of Instacart’s offerings.
Brian Mulberry, a portfolio manager at Zacks Investment Management, expressed that while this could potentially boost Prime memberships, maintaining high-quality service will be crucial for sustained success.
Stephen Ju from UBS mentioned that this update lowers barriers for both Prime and non-Prime shoppers, likely creating pressure on competitors like Uber Eats and DoorDash regarding their profit margins.
On the stock market, Amazon’s shares rose by 1%, while its grocery delivery rivals faced declines. Instacart’s shares dropped by 10.2%, alongside 4.4% declines for Kroger and DoorDash. Walmart shares fell by 2%, and Uber shares decreased by 1%.
In June, Amazon had revealed a $4 billion investment aimed at establishing same-day and next-day delivery services in more than 4,000 rural U.S. areas by the year’s end.
Earlier in May, Walmart announced its plans to provide delivery within three hours to 95% of the U.S. population, indicating that faster delivery is key to its success.
Doug Herrington, CEO of Worldwide Amazon Stores, highlighted the convenience for customers, stating they could order both milk and electronics together for prompt delivery to their homes.
While Amazon focuses on bolstering its grocery offerings in the U.S., it is facing challenges in the UK due to supplier issues, as noted in a study by the Groceries Code Adjudicator.
