Amazon is rolling out free grocery delivery to all Prime members (Business Insider)
Amazon announced this week that two-hour grocery delivery will be free for its Prime members, effectively eliminating its monthly US$14.99 fee for Amazon Fresh.
In order to qualify for free delivery, customers have to meet an order minimum – or pay an extra US$9.99 for delivery.
The company is currently only offering this service for existing Prime members who already use grocery delivery and has not indicated when it will become widely available yet.
Analysis and Comments
A move clearly meant to attract more people to relying on Amazon as their grocery provider as it eliminates a barrier to entry to its service and simultaneously may make competing providers such as Instacart and Shipt look more expensive.
Amazon’s grocery delivery service now covers some 2,000 cities (when you look at both Whole Foods and Amazon Fresh delivery locations) and the company’s push into this category (while trickier regarding the deliveries) makes sense if you consider the recurring line of revenue that comes with shipping these perishable goods.
Coincidently, Amazon has just reported that its shipping costs have increased 46% yoy (mainly due to transportation costs). The company now handles delivery for more than 40% of orders placed through its site according to data from Rakuten.
The move does however raise questions on the profitability of Amazon’s grocery business – according to TechCrunch it is currently not clear how many customers are already using the service and there are estimates that growth may be slowing