Two industries—streaming and grocery delivery—are currently heating up in the midst of their own wars for the hearts and wallets of consumers. Now, Amazon is flexing its muscles in the latter sector to stay ahead of the competition. Starting Tuesday, the company’s Amazon Fresh grocery delivery service is now free for Prime subscribers.
Previously costing $14.99 a month, the move will bolster the growth of Amazon’s grocery delivery service as it also continues to integrate its Whole Foods acquisition. Available in more than 2,000 U.S. cities, Amazon Fresh is a huge perk for existing Prime members and will attract plenty of new ones.
Crushing the Competition
Amazon’s move will certainly come as a gut punch to its competitors in the grocery delivery space. Earlier this month, Walmart announced its InHome service that delivers groceries straight to users’ fridges. Likewise, Uber recently acquired Cornershop to speed the development of its own service.
Just as these rivals were starting to gain hope of competing with the mega-giant, those hopes are now fading. More than 100 million people currently subscribe to Prime. Accordingly, Amazon is likely to capture a huge portion of the grocery delivery market with its recent move.
Stephenie Landry, the company’s vice president of grocery delivery says, “Prime members love the convenience of free grocery delivery on Amazon, which is why we’ve made Amazon Fresh a free benefit of Prime, saving customers $14.99 per month.”
Her statement goes on to say, “Grocery delivery is one of the fastest growing businesses at Amazon, and we think this will be one of the most-loved Prime benefits.”
Playing the Long Game
While making free grocery deliveries might seem like it will cost Amazon money (and indeed it might in the short-term) the e-commerce giant is playing the long game. Unlocking Amazon Fresh as a free perk will undoubtedly get more people to try it out.
Behind the scenes, grocery delivery is an extremely tricky service to get right. However, if it’s done correctly, it can lead to massive revenue on a recurring basis. Customers will return for fresh goods weekly or even more often. That’s exactly what Amazon is hoping to capture. Meanwhile, the move will also likely draw in some new Prime members that want to try the service. Once they subscribe, Amazon can hook them with its other perks like Prime Video, Music Unlimited, and, of course, free two-day shipping.
Reports from last year estimate that Amazon already controls a third of the grocery delivery market. Now, the company might have just won the battle for the industry. For consumers, this is a big win. For companies looking to compete, things aren’t looking so great.
Prime users wanting to take advantage of the new benefit will need to sign up on the company’s page and wait for an invitation while the feature rolls out.