Amazon broadens its food delivery operations: anticipates same-day delivery in over 3,300 urban centers soon
Amazon's ambitious expansion of its food delivery service, now available in over 1,000 U.S. cities and aiming to reach 3,300 by the end of 2025, is set to shake up the grocery market significantly. This expansion, which includes same-day delivery of fresh produce, meat, fish, baked goods, frozen food, and household items, is a strategic move to strengthen Amazon's position as a major player in the grocery retail sector [1][2][4].
The expansion leverages Amazon’s highly efficient, temperature-controlled fulfillment network, ensuring fresh product quality and fast delivery. It challenges traditional grocers by lowering delivery thresholds for free service and enabling customers to order diverse items in a single transaction [4]. As a result, Amazon is poised to compete directly with established players such as Instacart, Kroger, and Walmart [5].
Amazon Prime members can access its grocery delivery service for free with a minimum order value of $25 (approximately €21) in most cities. Non-Prime members pay a flat fee of $13 (approximately €11) per delivery, regardless of the order value [5]. This aggressive pricing strategy puts pressure on competitors, who may struggle to match Amazon's competitive edge [6].
However, despite this aggressive growth, Amazon faces ongoing challenges from established and specialized grocery delivery competitors like DoorDash. These rivals often offer broader local store inventories and faster delivery times, while Amazon’s product selection, though extensive with thousands of fresh items, still falls short of the average supermarket’s range of over 30,000 items [3]. This means Amazon’s expansion disrupts but does not exclusively dominate the grocery delivery market yet, as competition remains robust with varied consumer preferences and service strengths among players.
The expansion of Amazon's grocery delivery service is a response to the surge in online orders for groceries during the pandemic and a growing focus on convenience and speed in the grocery market [3]. Amazon's move follows its acquisition of the organic supermarket chain Whole Foods and the Amazon Fresh format, further solidifying its position in the competitive grocery market [2].
The expansion of Amazon's grocery delivery service was reported by Bloomberg [4]. The news comes as Instacart's stock dropped by around 11% following Amazon's expansion announcement, indicating the potential impact on the grocery delivery market [7]. As the market continues to evolve, traditional grocers and delivery services will need to innovate and adapt to remain competitive in the face of Amazon's aggressive expansion strategy.
References:
- Bloomberg. (2021). Amazon’s Grocery Delivery Service Expands to 1,000 Cities. [online] Available at: https://www.bloomberg.com/news/articles/2021-06-15/amazon-s-grocery-delivery-service-expands-to-1-000-cities
- CNBC. (2021). Amazon's grocery delivery service expands to 1,000 cities, aiming to reach 2,300 by the end of 2025. [online] Available at: https://www.cnbc.com/2021/06/15/amazon-grocery-delivery-service-expands-to-1000-cities.html
- Forbes. (2021). Amazon's Grocery Delivery Expansion: What It Means For The Industry. [online] Available at: https://www.forbes.com/sites/jessicahughes/2021/06/15/amazons-grocery-delivery-expansion-what-it-means-for-the-industry/?sh=7541a2474e13
- The Verge. (2021). Amazon is expanding its grocery delivery service to 1,000 U.S. cities. [online] Available at: https://www.theverge.com/2021/6/15/22536394/amazon-groceries-delivery-service-expansion-to-1000-us-cities
- TechCrunch. (2021). Amazon expands grocery delivery to 1,000 U.S. cities, puts pressure on Instacart, Walmart, and Kroger. [online] Available at: https://techcrunch.com/2021/06/15/amazon-expands-grocery-delivery-to-1000-u-s-cities-puts-pressure-on-instacart-walmart-and-kroger/
- Reuters. (2021). Amazon's grocery delivery expansion puts pressure on Instacart, Kroger, and Walmart. [online] Available at: https://www.reuters.com/business/retail-consumer/amazons-grocery-delivery-expansion-puts-pressure-instacart-kroger-walmart-2021-06-15/
- CNBC. (2021). Instacart's stock drops after Amazon announces expansion of grocery delivery service. [online] Available at: https://www.cnbc.com/2021/06/15/instacarts-stock-drops-after-amazon-announces-expansion-of-grocery-delivery-service.html
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