AmazonFresh Grocery Delivery Pulling Back

by Raymond Pucci 0

Don’t wait around for your groceries to be delivered if you live in one of several states where AmazonFresh is discontinuing the service. The following article reports on the changes to AmazonFresh.

Amazon.com is narrowing the range of its AmazonFresh grocery delivery program, cutting service in at least nine states a few months after sealing its purchase of Whole Foods Market.

The company notified some customers in California, Connecticut, Delaware, Maryland, Massachusetts, New Jersey, New York, Pennsylvania and Virginia on Thursday that Amazon Fresh would close in their area, Recode reported earlier.

An Amazon spokeswoman confirmed the company had cut service to some markets, but didn’t explain why. In a statement, she said AmazonFresh continued to serve many major cities in the U.S., including Seattle, New York, Chicago and Los Angeles, and a few abroad, including Berlin, London and Tokyo.

AmazonFresh launched in Seattle in 2007, and was slow to expand beyond the company’s hometown. Groceries were uncharted territory for Amazon, whose warehousing and logistics network was geared toward delivering non-perishable goods like books and DVDs.

Amazon’s move into groceries expanded with the $13.5 billion deal to buy Whole Foods, which closed in August, and analysts have speculated since that the company might link the organic grocer to its other food-delivery experiments.

Amazon also offers AmazonFresh Pickup, which is a mobile order and pay type service to order groceries online, then drive yourself to pick them up within a specified timeframe. It does not appear that this grocery pickup service is being affected by the decrease in AmazonFresh service areas. Currently, Whole Foods has a grocery delivery service via the Instacart ordering platform. Separately, Whole Foods would be an excellent provider of meal prep services, which would put them in competition with established players such as Blue Apron. In any case, the Amazon-Whole Foods combination has many options for food ordering services so expect more changes to occur within this category. Prime members would especially be a key target market for expanded shopping services, but there are many non-Prime members that are Whole Foods shoppers who Amazon would love to cross sell as well.

Overview by Raymond Pucci, Associate Director, Research Services Advisory Group at Mercator Advisory Group

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