Dive Brief:
- Amazon has expanded its delivery service for Prime members in parts of New York City, including Manhattan, Brooklyn and Long Island. It has also rolled out in Fort Lauderdale, Miami and Palm Beach, Florida, according to a company press release.
- Amazon’s Whole Foods delivery service first launched in February. Tuesday’s announcement brings Amazon’s delivery option to two dozen cities across the U.S. The two-hour delivery is free with a minimum order of $35, and a one-hour delivery costs an additional $7.99.
- "We’ve been delighted with the customer response to delivery in as little as an hour through Prime Now," Christina Minardi, Whole Foods Market EVP of operations, said in a press release. "… Today’s announcement is another way that we are continuing to expand access to our high-quality products and locally sourced favorites."
Dive Insight:
The online grocery race intensified this week, with Amazon’s announcement of expanded delivery service in two critical markets — New York City and Florida — coming on the same day as Walmart’s announcement that it is expanding delivery with Postmates in Los Angeles.
Tuesday’s news underscored the swift pace at which retailers are growing their online delivery channels. Online grocery sales are predicted to capture 20% of total grocery retail by 2025 to reach $100 billion in consumer sales, according to a study by the Food Marketing Institute conducted by Nielsen.
With this week’s news, Amazon’s footprint should grow even deeper in two critical markets. In New York, there are more than a dozen Whole Foods locations to help Amazon scale this service — including the Bowery Whole Foods, Manhattan’s largest supermarket. In Florida, grocery square footage jumped 6% last year, up from a 5% growth clip in 2016, according to real estate research firm JLL. At the same time, the rest of the country experienced a dip of nearly 29% in store openings last year.
Still, Amazon isn’t the only player chasing delivery dollars in these markets. Walmart is beginning to promote its same-day delivery option for groceries through Jet in New York. Additionally, Northeast e-grocer FreshDirect recently opened a state-of-the-art facility in the South Bronx that will help the company expand and deliver grocery orders faster and more efficiently, and Fairway Market continues to push the pace of online technology.
In Florida, Publix, the market share leader, partners with Instacart for same-day delivery. Kroger, which is scaling quickly thanks to its recent partnerships with Instacart and Ocado, has an investment in Lucky’s Market.
In other words, although Amazon has the lead, the competition is feisty. But Amazon’s second quarter grocery sales were up 40% year over year, and its current share of the online grocery space has now doubled that of closest competitor Walmart. As consumers continue to become more comfortable purchasing their groceries online, Amazon is, so far at least, in a good spot.
