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First they hook you, then they hose you.
Shoppers who skip the local supermarket in favor of Amazon’s Fresh delivery service are about to feel a bit more pinch. A year after increasing the annual price of Prime memberships from $119 to $139, the e-commerce mega-giant announced this weekend it is quadrupling the threshold to receive free deliveries on orders, from $35 to $150, starting on February 28. Clear up some pantry space, it’s time to start buying in bulk.
Cheaper by the Dozen
Amazon Fresh debuted in Seattle in 2007. Sixteen years, a $14-billion acquisition of a name-brand grocery chain, and a paradigm-shifting pandemic later, the company is still working out the kinks of its food delivery game. While Prime members originally had to pay an additional $14.99 per month for access to Fresh deliveries, Amazon dropped the extra subscription in 2019 to expand Fresh to all Prime subscribers — with delivery fees assessed at checkout for orders under $35 (or $50 for NYC shoppers).
The program’s expansion was soon met with an explosion in e-grocery shopping courtesy of the coronavirus. But now, shoppers in most markets will be paying delivery fees based on a new tiered pricing system — introduced just as the sector sees a decline in spending:
- Orders under $50 will carry a $9.95 fee, orders between $50 and $100 will carry a $6.95 fee, orders between $100 and $150 will have a $3.95 fee, and, finally, orders over $150 will have free delivery.
- E-commerce’s share of total grocery spending fell from 15% in December 2021 to 13% in December 2022, according to the most recent monthly Brick Meets Click/Mercatus Grocery Shopping Survey. Order frequency decreased 7%, while delivery sales fell from $3.3 billion to $3.2; still, order-and-pickup sales leaped from $3.8 billion to $4.4 billion.
Checking Out: Amazon is completing layoffs of 18,000 workers, with its brick-and-mortar stores division sustaining much of the damage. After years of sinking billions into building its ground game — via Whole Foods, Fresh-branded grocers, and Go convenience stores — Amazon still holds only some 2.5% of the overall grocery market share. That’s not the ‘instant’ delivery Amazon investors are used to.
