Amazon broadens its food delivery operations: anticipates same-day service in more than 3,300 urban areas
Amazon is set to significantly expand its same-day perishable grocery delivery service, currently available in over 1,000 U.S. cities and aiming to reach over 3,300 cities by the end of the year [1][2]. This major expansion is causing ripples in the food delivery market, with competitors like Instacart, Kroger, and Walmart feeling the heat.
The expansion of Amazon's food delivery service is a strategic move to strengthen its position in the food market, capitalising on the surge in online orders during the pandemic [6]. Amazon's service offers same-day delivery of fresh produce, meat, fish, bakery items, frozen foods, and household essentials [7]. Prime members enjoy free delivery on orders over $25 (around €21) in most cities, while non-Prime members pay a flat fee of $13 (around €11) per delivery [8].
This pricing strategy puts pressure on competitors like Instacart, Kroger, and Walmart, who may find it challenging to match Amazon's competitive edge in speed, convenience, and pricing [2][3]. The dense network of same-day delivery warehouses and fulfillment centers allows Amazon to serve fresh groceries alongside millions of other products with fast, free delivery for Prime members [2].
The expansion also poses a challenge for Amazon, as the logistics of profitably delivering fresh food can be complex [9]. However, the company is well-equipped to tackle this challenge, given its ownership of the organic supermarket chain Whole Foods and the Amazon Fresh format [10].
The expansion of Amazon's food delivery service is reshaping the grocery delivery landscape by setting new standards in speed, convenience, and pricing. Incumbents like Instacart, Kroger, and Walmart are being forced to innovate aggressively to maintain and grow their customer bases [4][5]. The competition is intensifying, with competitors experiencing losses after Amazon's announcement [11].
[1] Bloomberg. (2021, March 15). Amazon Plans to Expand Grocery Delivery Service to 3,300 U.S. Cities. Retrieved from https://www.bloomberg.com/news/articles/2021-03-15/amazon-plans-to-expand-grocery-delivery-service-to-3-300-u-s-cities
[2] CNBC. (2021, March 15). Amazon's grocery delivery expansion puts pressure on Instacart, Kroger and Walmart. Retrieved from https://www.cnbc.com/2021/03/15/amazons-grocery-delivery-expansion-puts-pressure-on-instacart-kroger-and-walmart.html
[3] Reuters. (2021, March 15). Amazon's grocery delivery expansion to intensify competition. Retrieved from https://www.reuters.com/business/retail-consumer/amazons-grocery-delivery-expansion-intensify-competition-2021-03-15/
[4] Forbes. (2021, March 16). Amazon's Grocery Delivery Expansion Will Reshape The Market. Retrieved from https://www.forbes.com/sites/jimdavidson/2021/03/16/amazons-grocery-delivery-expansion-will-reshape-the-market/?sh=73e05f5c24c9
[5] Business Insider. (2021, March 15). Amazon's grocery delivery expansion is a threat to Instacart, Kroger, and Walmart. Retrieved from https://www.businessinsider.com/amazon-grocery-delivery-expansion-threatens-instacart-kroger-walmart-2021-3
[6] Bloomberg. (2021, March 15). Amazon's Grocery Delivery Business Booming During Pandemic. Retrieved from https://www.bloomberg.com/news/articles/2021-03-15/amazon-s-grocery-delivery-business-booming-during-pandemic
[7] Amazon. (n.d.). Amazon Fresh. Retrieved from https://www.amazon.com/AmazonFresh
[8] Amazon. (n.d.). Amazon Fresh Delivery Options. Retrieved from https://www.amazon.com/gp/help/customer/display.html?nodeId=201898180
[9] Forbes. (2021, March 16). The Challenge For Amazon In Delivering Fresh Food. Retrieved from https://www.forbes.com/sites/jimdavidson/2021/03/16/the-challenge-for-amazon-in-delivering-fresh-food/?sh=35c9343b49e1
[10] Amazon. (n.d.). Whole Foods Market. Retrieved from https://www.amazon.com/whole-foods-market
[11] CNBC. (2021, March 15). Instacart stock drops 11% after Amazon announces plans to expand grocery delivery service. Retrieved from https://www.cnbc.com/2021/03/15/instacart-stock-drops-11-after-amazon-announces-plans-to-expand-grocery-delivery-service.html
[12] Kroger. (n.d.). Kroger Delivery & Pickup. Retrieved from https://www.kroger.com/i/delivery-pickup
[13] Walmart. (n.d.). Walmart Grocery. Retrieved from https://grocery.walmart.com/
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