SEATTLE — Amazon is leveraging its large base of Prime members to seize a bigger share of the U.S. grocery market.
The company this month announced plans to make free grocery delivery a benefit of Prime membership. Members in more than 20 major metro areas can get free two-hour grocery delivery after the company eliminated charges of an extra $15 per month, or $180 per year, for Amazon Fresh delivery on top of the $119 annual Prime fee.
The new delivery option is in addition to the free delivery Amazon offers to Prime members who make online purchases valued at $35 or more at many of its 500 Whole Foods Market stores in the United States and the U.K.
Amazon Fresh delivers orders from fulfillment centers located close to customers. Whole Foods orders are fulfilled in the grocery stores.
Amazon said free delivery from Amazon Fresh or Whole Foods will be available first to its existing grocery delivery customers, and then to other Prime members in the 2,000 U.S. markets where the company’s grocery delivery services are offered.
Amazon also offers discounts to Prime members when they shop at Whole Foods, and has integrated Whole Foods ordering into its Alexa voice assistant.
Amazon has been spending freely to increase delivery capacity as it shifts from two-day to one-day shipping as a core benefit of its Amazon Prime subscription service. The company last month reported that it spent $9.6 billion on shipping in its most recent quarter, during which shipping costs rose 46% from a year earlier. Amazon said it expects to allocate $1.5 billion in the current quarter as it expands one-day delivery to more products and regions.
Amazon also said it is spending to expand and further integrate Whole Foods into its grocery pickup service. Rival Walmart said it will offer grocery pickup from 3,100 stores and grocery delivery from 1,600 stores by the end of 2019.
Meanwhile, Amazon last month announced an expansion of Counter, a network of staffed pickup points that gives customers the option of picking up their Amazon packages in-store at a partner location. Delivery to a Counter location is available for tens of millions of products sold on Amazon.com. Counter is part of the Amazon Hub network of secure, convenient pickup locations, which includes thousands of Lockers across the country, the company said.
Since its launch in June, Amazon Hub Counter has brought tens of thousands of Amazon customers to partner locations, including more than 100 Rite Aid locations.
Shoppers at Amazon.com are finding prices that beat other U.S. online retailers by 20%, on average, across key product categories, according to Profitero Inc., operator of an e-commerce analytics platform.
Profitero’s latest study in its “Price Wars” series compared daily prices on 12,500 products at 20 retailers between July and September. Overall, Amazon had the lowest prices on the broadest selection of popular items, followed by Walmart, which offered digital shoppers prices 4.1% higher than Amazon’s. The price gap between Amazon and Target was 10.6%, according to Profitero, and the gap between Amazon and Jet.com was 11.3%.