Same-Day Service in 1,000 U.S. Locations
Expansion to Over 2,300 by Year-End
Walmart Holds Over 20% Grocery Market Share
Amazon, the world's largest e-commerce company, has officially entered the fresh food market, issuing a direct challenge to Walmart, the traditional offline powerhouse.
On August 13 (local time), Amazon announced that it would provide same-day fresh food delivery service in 1,000 cities and towns across the United States, with plans to expand the service to more than 2,300 locations by the end of the year.
Members of Amazon's paid subscription service, Amazon Prime, can receive free delivery on orders over $25, while non-members will be charged a delivery fee of $12.99 per order. The same-day fresh food delivery covers items such as dairy products, eggs, meat, seafood, baked goods, and frozen foods.
Amazon has made several attempts to expand its grocery business in the past, but each effort ended in failure. In 2022, the company recruited Tony Hoggett, formerly of Tesco-one of the world's largest retail and supermarket chains headquartered in the UK-to overhaul both its offline stores and online operations, but he resigned at the end of last year. Currently, the grocery division is led by Jason Buechel, former CEO of Whole Foods Market.
With Amazon, already dominant in the e-commerce sector, now making a full-scale entry into fresh food delivery, significant repercussions are expected throughout the retail industry. Analysts suggest that Amazon's overwhelming logistics and membership base in e-commerce could quickly erode the market share of traditional leaders.
Reflecting these concerns, Instacart, a company specializing in grocery delivery, saw its stock price plunge by 11% immediately after Amazon's announcement. Shares of supermarket chains Kroger and Walmart also fell by 4.3% and 1.3%, respectively.
The main focus in the market is the competition with Walmart, which holds more than a 20% share of the U.S. grocery market. Walmart has also achieved significant success in e-commerce and expects to be able to deliver to 95% of all U.S. households within three hours by the end of the year. Walmart has been offering same-day fresh food delivery for several years and continues to expand its delivery options.
According to Bloomberg, groceries account for about 60% of Walmart's U.S. sales, making it a critical segment. In a situation where inflation is accelerating due to tariffs, groceries have become a key factor in attracting American consumers. As prices rise, consumers become more price-sensitive and seek out cheaper and more efficient distribution channels. In this context, if Amazon offers fresh food and groceries at competitive prices or with faster delivery, it could gain a significant advantage over other companies.
Scott Devitt, an analyst at Wedbush Securities, commented, "Companies like Instacart were established to deliver groceries instead of traditional grocery stores, and firms like DoorDash and Uber have also entered this field." He added, "Amazon has a nationwide network of logistics centers and delivery trucks, and it seems to have figured out how to store and deliver fresh food within a same-day delivery system."
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