Amazon announced its fourth quarter earnings yesterday, and among the big numbers the company released was the news that it now has 150 million Prime members worldwide. That’s a lot of people with access to Fleabag. Well, more germane to our purposes here at The Spoon, that’s a lot of people who can get free grocery delivery courtesy of Amazon.
We should caveat that the 150 million number is global, and Amazon didn’t break out how many of those members are in the U.S. What we do know is that number is a 50 percent increase in the number of memberships from April 2018, when the company said it had 100 million Prime members worldwide. And while this isn’t a first-hand source, in January of last year, Consumer Intelligence Research Partners estimated that Amazon had 101 million Prime members in the U.S.
Prime members in more than 2,000 U.S. cities get free one- and two-hour grocery delivery from Whole Foods and Amazon Fresh, a perk Amazon added in October of last year (we explained why Amazon did this). In yesterday’s earnings, Amazon said that delivery orders from Whole Foods and Amazon Fresh more than doubled in the fourth quarter year-over-year.
To be fair, “doubling” is a vague and almost useless stat since we don’t know what the previous number was. But flipping that one lever had an immediate impact. What happens as Amazon starts ramping up its grocery efforts?
While Amazon owns all of the Whole Foods locations, the company is building out its own grocery stores, the first of which is slated to open next month in Woodland Hills, CA. Having its own grocery chain is important for a number of reasons.
First, Amazon stores won’t be bound by the same food restrictions as Whole Foods, which doesn’t stock items that contain things like artificial sweeteners or colors. So Amazon will be able to carry more of the products people want.
Second, Amazon is building its own grocery supply chain and logistics from the ground up, so speed and order fulfillment are bound to be innovative and fast. Additionally, as it builds out more physical locations, Amazon will be able to offer more grocery pickup options instead of just delivery.
Finally, the company has tons of data on its Prime members. It knows what they buy, how often, etc.. It will be able to leverage this to make recommendations (perhaps a nudge from Alexa), create promotional offers or bundle in other services (package pickup or return).
All of this comes amidst a fierce battle for grocery supremacy in the U.S. Walmart is rolling out its Delivery Unlimited service nationally, and Kroger is building out robot-powered smart warehouses across the country to speed up online grocery order fulfillment. And both of those retailers are experimenting with grocery delivery via self-driving vehicles.
But Amazon’s Prime Membership gives it a unique weapon in grocery wars — an army of people paying for a closer relationship with Amazon. For better or worse, Amazon is a deeply embedded part of many people’s lives here in the U.S., which means Amazon will be able to tie together technology and data and convenience together in a package in a way its rivals will be hard pressed to match.