Amazon.com, Inc. (Washington) is eliminating its grocery delivery service fee for Prime members in the United States and making shopping easier by combining AmazonFresh and Whole Foods Market (Texas) ordering on a single site, in a bid to fend off rival grocery sellers like Walmart Inc. (Arkansas) and Kroger Co. (Ohio).
Amazon is dropping its $14.99 grocery delivery fee as Walmart—the No. 1 grocery seller in the United States—rolls out a $98 annual “Delivery Unlimited” grocery membership to compete with Amazon’s $119 Prime delivery subscription.
Amazon has profits from its Web Services business and has demonstrated a willingness to lose money on initiatives aimed at driving more customers to its sprawling online marketplace.
Chief Executive Brian Olsavsky said “foregone shipping revenue”—or money Amazon would otherwise have brought in from customers who once paid for fast shipping—would contribute to a spike in Amazon shipping costs that some expect to top $11 billion in the fourth quarter.
“I think that this is going to be a game changer, and it will grow into one of the most loved benefits of Prime,” said Stephenie Landry, Amazon’s vice president of grocery delivery.
Amazon said in 2017 it was ending its Fresh grocery delivery service for select areas. Landry, however, said the business is very much growing and has expanded this year to areas like Nashville, Orlando and Las Vegas.