When Amazon purchased supermarket chain Whole Foods for $13.7 billion in June last year, some observers were left scratching their heads as to how the two companies would combine, and what it meant for Amazon’s quest for global domination. But when the online shopping giant announced in February of this year that it would be launching free two hour grocery delivery, it became clear – Amazon is trying to stake a firm claim in the multi-billion dollar food delivery industry.
This isn’t the first time Amazon has tried to make in-roads into the grocery delivery market, but previous efforts have largely been unsuccessful. Its decade-old AmazonFresh delivery service never really got started, and is now being discontinued in many states. But the company will hope that, by combining with Whole Foods, it will be able start afresh, so to speak.
Available exclusively to Amazon Prime users, the speedy delivery service is currently only operating in Texas, Cincinnati, Dallas and Virginia Beach. During this trial period, groceries will be delivered in under two hours, between 8am and 10pm, and free of charge for all purchases over $35.
The announcement will certainly come as an unwelcome one to other grocery delivery services, Instacart being one of them. The San Francisco-based company, founded in 2012, offers same-day delivery on groceries, but only to users subscribed via their $149 annual membership.
The latest Amazon offering comes shortly after the company launched its first brick-and-mortar store in Seattle in January of this year. Amazon Go is cashier and cart-free. And while there is only one right now, the concept is sure to begin to grow quickly if the Seattle branch proves to be a success.
The scale and efficiency at which Amazon is expanding into different industries and vanquishing competitors is concerning to some. A study released by Brooking Institution think tank in 2014 suggested that multi-industries giants are driving a decline in US entrepreneurship.
Amazon’s attempts to move from being an exclusively e-commerce business to one that also has stakes in brick and mortar stores and grocery delivery are risky. The company has, after all, failed here before. And at $13.7 billion, it’s an expensive risk to take. But Amazon has the funds to take these risks, being recently valued at over $700 billion, and it will take a lot to convince it that expanding beyond the online marketplace is a bad idea.