Amazon Prime members in more than 3,500 U.S. cities can now get free unlimited grocery delivery for orders over $35 — if they pay $9.99 per month.
The service initially rolled out to select cities in December, and is now widely available.
Prime members — who already pay $139 per year — can order online from Whole Foods or Amazon Fresh and select a one-hour delivery window or pick up at the physical store.
The service also provides free delivery for orders over $35 from other retailers including Cardenas Markets; Save Mart; Bartell Drugs; Rite Aid; Pet Food Express; and Mission Wine & Spirits.
Customers with a registered EBT card can get the service for $4.99 per month.
Amazon first entered the grocery delivery market back in 2007. It has gone through numerous iterations of service levels at different price points.
- In 2021, Amazon added a $9.95 fee to Whole Foods delivery orders, which were previously free to Prime members who spent more than $35.
- In February 2023 Amazon started adding new fees for Amazon Fresh deliveries, and tweaked the fees again in October.
- Last year Amazon began offering grocery delivery service to customers who aren’t Prime members in select cities.
Analysts from Wedbush said that the new $9.99/month subscription offering is “significantly more affordable than the company’s existing fee structure.” Instacart shares were down more than 5% on Tuesday.
“We think Amazon’s subscription plan is competitively priced versus existing peers in the market and is potentially more affordable given the absence of per-order service fees, which peers including Instacart charge on each order,” Wedbush said in a report.
Amazon has struggled to dominate grocery like it has with online shopping and cloud computing, but continues to invest in the sector.
The tech giant bought Whole Foods for $13.7 billion in 2017 and has opened its own high-tech Amazon Go convenience stores and larger-scale Amazon Fresh locations.
The company recently announced it is shifting away from its “Just Walk Out” cashier-less technology in its large grocery stores. The system — which uses cameras and sensors to detect what people put in their carts, letting them avoid the checkout line — will still be developed for Amazon’s smaller stores and third-party venues.
Amazon continues to focus on Dash Carts, which also let shoppers skip the line but currently require scanning or manually entering items as they go. The company recently started rolling out the Dash Carts in Whole Foods locations.
In February 2023, Amazon CEO Andy Jassy said that the company was pausing the expansion of its Amazon Fresh grocery stores, amid broader cutbacks, “until we have that equation with differentiation and economic value that we like.”
In its report today, Wedbush said the new subscription offering is “an important step forward in the company’s broader strategy and should help Amazon capture incremental share, particularly in perishable categories where the company has struggled historically.”
