Amazon is making a “major expansion of its grocery efforts” with same-day delivery of perishable items to 1,000 U.S. markets. Wedbush analysts highlighted in a note Thursday that the move opens up an “untapped TAM [total addressable market].”
The company expects coverage to reach 2,300 markets by year-end.
For Prime members, delivery will be free on orders above $25, with a $2.99 fee for smaller baskets.
Wedbush noted that previously, free same-day delivery from Amazon Fresh required orders over $100, while all Whole Foods grocery deliveries carried a $9.95 fee.
A $9.99-per-month subscription introduced in April 2024 offered free delivery on orders over $35 within a two-hour window, covering Whole Foods, Amazon Fresh and partnered grocers.
“Today’s announcement is an important step forward in Amazon’s broader strategy and should help the company capture incremental share in perishable categories where they have struggled historically,” Wedbush said.
The move is significant because “Amazon has yet to displace incumbents in the grocery category, at least for perishables,” Wedbush added.
Grocery remains the largest retail category and is “still relatively untouched by the internet,” with Walmart generating 60% of sales from the segment.
Competitors such as Instacart, DoorDash and Uber have targeted the category, while Walmart, Target and Costco have built strong delivery and pickup businesses.
“Along comes Amazon with an existing nationwide network of fulfillment centers and delivery trucks that seems to have finally figured out how to store and fulfill perishables in a way to support same-day efforts,” Wedbush wrote.
Wedbush said stock reactions were “reasonable,” with Amazon up 1%, Instacart down 11%, DoorDash off 3.8% and Uber down 1%. Walmart, Target and Costco also fell.
Source :
https://www.investing.com/news/stock-market-news/amazons-grocery-delivery-expansion-should-capture-incremental-share-wedbush-4191837
