Grocery. It’s the market Amazon just won’t give up on, and despite the tepid response to Amazon Fresh stores and its largely dismantled just walk out technology, Amazon has returned to an initiative straight from its mainstream playbook – subscriptions.
Amazon Prime membership is one of the great global retail successes – locking customers in to free delivery for an annual fee and bringing in lots of tie-ins, such as its tv and audio streaming services.
Now the company has announced that all Prime and Prime Access members and customers with a registered EBT card in the U.S. can get an annual subscription with unlimited grocery delivery on orders over $35 from Whole Foods Market, Amazon Fresh, and other local grocery and specialty retailers.
Amazon says that it’s a benefit that will pay for itself in as little as one delivery order per month.
It’s actually the expansion of a service first launched in April, when Amazon introduced a monthly grocery delivery subscription at $9.99 per month for Prime members on the same terms.
“We have many different customers with many different needs, and we want to save all of them time and money so they can focus on what matters most. In line with this, Amazon is expanding affordable grocery delivery access to even more households by making our discounted monthly grocery delivery subscription of $4.99 available to all Prime Access members, regardless of their qualifying form of government assistance,” Tony Hoggett, senior vice president of worldwide grocery stores at Amazon, said in a statement.
Amazon Grocery Subscription
The subscription includes one-hour delivery windows at no extra cost where available, unlimited free 30-minute pickup on orders of any size, priority access to Recurring Reservations for a weekly grocery order, as well as unlimited delivery on $35 and above orders from local grocery and specialty retailers like Cardenas Markets, Save Mart, Rite Aid, Pet Food Express, and Mission Wine & Spirits.
But the implementation also tells a story of missed opportunities, with a report published late last year that revealed market leader Walmart continues to lead from the front and is on track for a 26.9% grocery e-commerce market share by the end of 2024.
According to report author Insider Intelligence, Amazon’s share of the digital grocery space will actually have fallen to 18.5% by the end of 2024, despite ongoing sales growth, as Insider Intelligence predicted that Walmart will reach online sales of $58.92 billion for 2024, up 19.5% from $49.32 billion last year. Amazon digital grocery sales will rise by just 10% during the same period, from $36.41 billion in 2023 to $40.5 billion this year, the research firm predicted.
Wholes Foods Price Battle
Amazon-owned Whole Foods has also been trying to chip away at its high-price image with more sales tags and further Prime membership discounts and the strategy appears to have accelerated in recent months as the specialty grocer tries to win over shoppers from discount grocers as it attempts to shed its ‘Whole Paycheck’ reputation.
Outside the U.S. the story is similar. Amazon targeted the U.K. as a growth market and launched its stores in Britain with bold ambitions and yet earlier this summer Amazon Fresh announced that it was putting a stop to its grocery delivery service in five U.K. cities following an evaluation of its offerings and operations network.
From the start of June, its online Fresh offer ended in Glasgow, Portsmouth, Leeds, Sheffield and Newcastle, while store growth has ground to a halt.
Amazon knows that subscriptions work for it and it has leveraged Prime at a level completely beyond any other retailer, and yet grocery remains a sector in which its magic touch seems to have deserted it. This latest roll of the dice might just determine whether it can ever take a bigger slice of the grocery pie.
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