In a released statement from Amazon, the company launched its online same-day grocery delivery service called “Amazon Fresh” yesterday. For now, the service will be available only to customers in the Brooklyn New York neighborhood of Park Slope but there are plans to expand the service within the near future.
Amazon’s goal is to provide customers what they want while aggressively pursuing its cut of the $600 billion grocery industry. The area of Park Slope was selected because of its demographic, which consists of young professional families who have busy schedules and typically seek a healthier lifestyle.
As outlined, customers who place grocery orders prior to 10:00 am will have the selected food items delivered the next day although an early morning delivery option is available for orders placed before 10:00 pm the previous night. While the main focus is food, customers can order other items as well to include toys and electronics, all with the same-day delivery guarantee.
To enjoy the Amazon Fresh program, customers must be members of the company’s Prime Program, which comes at membership fee of $99 a year. This service also includes free two-day delivery on a wide range of other Amazon products and provides a broad spectrum of movies and streaming television shows.
Through the end of 2014, customers of Amazon Fresh will not pay any additional fees for delivery but after January 1, they will be required to upgrade to the membership program Prime Fresh for $299.
Prior to yesterday’s launch, Amazon Fresh was only available in Seattle, Washington as well as Los Angeles and San Francisco, California. However, by launching the program in New York, it is a clear indicator that the company is taking its role in the grocery industry extremely serious, especially since this is an entirely new endeavor.
Amazon knows the program will face stiff competition in New York against other online local grocers to include Fresh Direct, which reportedly generates up to $500 a year in sales, as well as Instacart, a highly funded startup that recently completed a partnership with Whole Foods. Google’s same-day delivery business also operates in New York City although perishables such as meats, fish, dairy, and produce are excluded, unlike Amazon Fresh.
Same-day delivery services first became popular 15 years ago, offered by companies like Webvan and Kozmo but during the dot-com bust, this type of service faded out. However, with new technology and a slew of new mobile devices and applications, interest of and demand for same-day delivery services has been reignited.
Amazon’s approach is somewhat unique from its competition in that it purchases grocery items in bulk and then stores them throughout the country in warehouses. The company has also created partnerships with a number of local food vendors and restaurants, making it possible for customers to buy regional specialties if desired. Just recently, Amazon turned to the US Postal Service for help with grocery delivery.
Overall, the grocery business operates with low profit margins but according to Amazon, their same-day service will boost the frequency of purchases and therefore, pave the way for same-day delivery of higher-margin goods and better profit margins.