Dive Brief:
- AmazonFresh will now be available to Prime members in the cities of Houston, Minneapolis and Phoenix, according to a company press release.
- This is the second expansion of AmazonFresh in the U.S. since June, when Amazon announced plans to bring the service to Las Vegas. On Thursday, Amazon also announced it would expand AmazonFresh to India, with service kicking off in the city of Bengalaru.
- Prime shoppers can get deliveries over $35 for free within two hours, while one-hour delivery comes with a $7.99 fee. Orders below the $35 threshold incur a $9.99 fee. Amazon is offering $10 off for first-time customers with a 30-day free trial of AmazonFresh. The service costs $14.99 a month.
Dive Insight:
The addition of four cities plus an international expansion in the past two months amounts to a revival of AmazonFresh after the service dwindled and growth slowed for nearly two years. The challenge for Amazon now will be determining whether or not customers still want AmazonFresh with so many other grocers offering delivery.
There's no shortage of e-commerce savvy grocers in these metro areas, with H-E-B in Houston, Hy-Vee and Target serving Minnesota and Fry's Food Stores in Phoenix. Add to that Walmart's ever-expanding grocery pickup and delivery in each location — including a test of its unlimited delivery subscription service in Houston — and AmazonFresh faces some serious competition in these new markets.
However, Houston, Minneapolis and Phoenix are also home to multiple Whole Foods locations, which currently offer grocery delivery through Prime Now — and which Amazon could leverage to boost its Fresh service. Amazon could be expanding Fresh based on its existing footprint with Whole Foods and an established base of Prime members to generate the most customer interest.
Reports have detailed Amazon merging its Fresh and Prime Now services to create a more cohesive grocery experience for customers, which has eluded Amazon in the past as it runs multiple grocery ventures. That merger, which reportedly caused hundreds of company layoffs last year, was supposed to be finished by the beginning of this year, Yahoo Finance reported.
Another essential component for AmazonFresh to succeed is for Amazon to establish the necessary infrastructure to fulfill fresh grocery orders. That could mean utilizing more Whole Foods locations for fresh food, adding more fresh fulfillment centers or adding more AmazonFresh Pickup locations, which launched in Seattle in 2017 but haven't expanded since. As of now, it's unclear how many fresh fulfillment centers the company has and where they operate.
