Amazon Capitalizes On Delivery Surge With Same-Day F&B Expansion

Same-day grocery delivery had a moment during the pandemic, but in the years since, the industry has consolidated as larger grocery chains have filled the void and are competing for share.

Amazon is now leveraging its deep pockets and robust logistics infrastructure to offer Same-Day Delivery of perishable groceries in over 1,000 cities, with plans to expand that to around 2,300 by the end of year. The move comes as the ecommerce behemoth puts resources behind its grocery business and fires shots at the other major players in grocery delivery – namely, Walmart and Instacart.

Thousands of food items from produce, dairy, meat, seafood, baked goods, and frozen foods will now be available to Amazon customers for same-day delivery. Prime members will be offered free delivery for orders over $25 (in most cities), while member orders under the minimum will be charged an additional $2.99 fee. For customers without a Prime membership, all same-day grocery delivery will be charged a $12.99 fee, regardless of order size.

While Amazon surpassed Walmart during COVID as the number 1 grocery delivery platform, “this came largely from non-perishable grocery on Amazon.com, which over time has proven to be a limitation to growth,” said coBetsy McGinn, an Amazon strategy consultant and founder of McGinn eComm.

“Walmart’s growth is not coming so much from Walmart.com where they ship nonperishable grocery in a box to your house, but rather from delivery and click-and-collect of fresh perishable foods, so Amazon really needed to get in this game more broadly,” she added.

The move comes after testing the service in markets like Phoenix, Ariz., Orlando, Fla., and Kansas City, Mo., with select perishable groceries – bananas, milk, eggs, bread, ice cream and others. Amazon reported an uptick in fresh food purchases and some grocery items replacing best-selling non-food products on the ecommerce platform.

“Expanding to new cities gives Amazon an opportunity to serve more customers,” global business strategy consultant Brittain Ladd told Nosh via email. “Selling perishable products allows customers to buy everything they need from Amazon. Customers who shop at Amazon but buy their groceries from Instacart or Walmart can now do all of their shopping on Amazon.”

The online retailer reported it generated gross sales over $100 billion for groceries and household essentials in 2024, excluding sales from Whole Foods Market and Amazon Fresh.

In June, Amazon consolidated its Whole Foods leadership structure under the Worldwide Grocery Stores unit. Former Whole Foods CEO Jason Buechel was tasked with leading the business unit. At the time, the move was seen by some industry-watchers as a way to implement more control over the Whole Foods Market banner and prioritize Amazon’s opportunity in grocery.

“Amazon is an ecosystem, and within the ecosystem are customers who want to have options for how they buy groceries and other products,” Ladd said. “Next, Amazon will [likely] open automated micro-fulfillment centers to fulfill online grocery orders. In time, it will open more physical stores and its ecosystem will be able to meet the grocery needs of everyone in America.”

Same-day perishable item delivery also allows Amazon to track, target and steer potential new shoppers into its grocery set. Besides its expansive logistics network, Amazon’s competitive advantage lies in its use of customer data and media resources, which can be utilized to directly compete with the ecommerce delivery infrastructures of Walmart and Instacart.

While ecommerce is still a relatively small slice of grocery shopping, it continues to grow (albeit at a slower pace than during COVID lockdowns).

U.S. online grocery sales reached $10 billion in July, a 26% increase from the prior-year period, according to the latest Brick Meets Click Grocery Shopper Survey. Delivery sales were more than half of all eGrocery monthly gains, reaching $4.6 billion in July, a 36% rise year-over-year.

“The elimination of explicit fees, like the standard delivery cost, via a membership or subscription program, removes a top barrier to increased usage and customers are taking advantage of it,” said Brick Meets Click partner David Bishop in a statement. “This tactic is unlocking latent demand for delivery, which is typically viewed as the more convenient but also the more expensive option when compared to pickup.”

While the opportunity to grow its share even further in ecommerce, McGinn cautioned that it is an “aggressive test” to understand the viability of the same-day delivery model in perishable goods.

“Grocery is a tough space,” she said. ”Gambles have made [Amazon] who they are, but in the grocery arena, Amazon has changed direction many times in the last 10 years, trying to crack the code on grocery. It’s hard to predict where this will lead.”