Amazon Adds Free Grocery Delivery to $119-a-Year Prime Membership Program

(The Seattle Times/TNS) -

The battle to deliver your groceries is intensifying this fall, with Amazon leveraging its strategically important Prime membership program in a bid to capture more online grocery orders.

The company on Tuesday dropped the $15-a-month grocery delivery fee it had charged Prime customers on top of the $119 a year they pay for shipping and media services. Now, those Prime members can use it without the extra charge, and others new to grocery delivery can request an invitation to use the service.

An Amazon executive would not specify how long people should expect to wait for the new perk.

“We know this is going to be a very popular service and we want to make sure we do a great job,” said Stephenie Landry, vice president of grocery delivery at Amazon.

The AmazonFresh grocery delivery program began in Seattle in 2007 and was slow to expand. A decade later, the company took a bigger step into food retail with the acquisition of Whole Foods Markets, and is now deeply engaged in the highly competitive food category against rivals such as Kroger and Walmart.

Kroger, the grocery giant that owns QFC, charges nearly $12 per order for delivery. Walmart charges $7.95 for next-day and $9.95 for same-day delivery on orders of $30 or more, and said it is rolling out a $98-a-year unlimited delivery option to 1,400 stores this fall. Target acquired delivery company Shipt, which offers same-day grocery delivery for $99 a year or $9.99 per order. Other players include Instacart and Peapod, which partner with grocery stores to provide delivery.

Amazon’s big retail rivals are also emphasizing in-store pickup of online orders, making use of their numerous locations spread across the country, something Amazon also offers at Whole Foods locations.

Amazon’s grocery offering pulls from two sources: Whole Foods Markets, where employees pick orders from local store shelves, and AmazonFresh fulfillment centers, the network of close-in food warehouses Amazon built as part of its earlier forays into food delivery.

The company has added thousands of new jobs to support grocery delivery, Landry said. (Amazon disclosed last week that it hired close to 100,000 people in the third quarter of this year alone and now employs more than 750,000 full- and part-time employees.)

Customers can search Amazon’s website for offerings from both Whole Foods and AmazonFresh, which have some overlapping inventory. But they have to choose a shopping basket in one store or the other, spending at least $35 to qualify for no-charge delivery. Orders are delivered by Amazon Flex third-party contractors.

Landry said the grocery delivery service is available to people in 2,000 cities and towns, but did not know what percentage of the Prime membership base — numbering upward of 100 million customers — that would cover.