The war to win your online grocery shopping dollars escalated this morning as Amazon announced it was now offering unlimited free grocery delivery for its Prime members. The move waives the previous $14.99 delivery fee and offers options for one- and two-hour delivery through Amazon Fresh and Whole Foods Market.
Why did Amazon make this move now? I mean, obviously it’s using all of the levers at its disposal to get more of your dollars (and shopping data!) as it fends off grocery rivals like Walmart, Kroger and Target. With an estimated 105 million Prime members in the U.S., Amazon has a sizeable audience that it can sway, and it needed to move the needle when it comes to online grocery shopping.
Though online grocery is a small sliver of the overall grocery shopping now, it’s growing, and Amazon needs to change the nature of how people shop for groceries on its site. Research from Coresight earlier this year showed that Amazon was already leading in online grocery shopping, but with a pretty big caveat. As we wrote in May:
When consumers are buying groceries online, Amazon.com is the top place to do it. Coresight says 62.5 percent of who bought groceries online did so through Amazon, which commands a double digit lead over competitors like Walmart and Target (see below). It should be noted, however, that most of this shopping is through Amazon proper, not Amazon Fresh or Prime Now, and that Amazon shoppers generally spend less on groceries there than at Walmart.com, Target.com or Kroger.com, making Amazon shoppers “occasional or small-basket online shoppers.”
By making grocery delivery free for Prime members, Amazon is looking to convert casual shoppers into more dedicated big basket ones.
This new Prime perk also comes just a month after Amazon rival Walmart announced it was rolling out its Delivery Unlimited service nationwide. As the name states, Delivery Unlimited gives Walmart shoppers unlimited grocery delivery for $98/year or $12.95/month. Amazon Prime is $119/year or $12.99/month and includes faster shipping on items ordered through Amazon, as well as video and music streaming services.
We would be remiss if we didn’t note that waiving the grocery delivery fee also comes as Amazon is reportedly prepping its own chain of supermarkets separate from its Whole Foods subsidiary. We don’t have any details on this new chain yet, but it’s not hard to imagine that online grocery shopping and Prime member benefits will be baked into its infrastructure from, well, Day 1.
In its announcement blog post, Amazon said that Prime members currently using the grocery delivery can continue to use the service. Other Prime members who live in one of the 2,000+ locations where grocery is available can request an invitation to shop Amazon Fresh or Whole Foods delivery at amazon.com/grocery, and will be notified when they are able to do so.