Amazon’s grocery price war is finally here
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Amazon’s grocery price war is finally here

Ecommerce giant Amazon’s push into the grocery world is accelerating, as a price war looms on the horizon. Amazon Prime Now – a two-hour grocery order and delivery service – is on its way to Dallas and Austin, Texas; Virginia Beach, Virginia; and Cincinnati, Ohio. The goods that the service delivers will some straight from Whole Foods, the trendy grocer that Amazon purchased six months ago, and promises to shake up the grocery world.

Amazon’s share price is up by almost 60% over the last 12 months

graph 1302 amazon

SOURCE: Yahoo Finance

Amazon is planning to roll this service out across the U.S. in a bid to grab a sizeable portion of the country’s $1.3 trillion grocery market. There’s room for Amazon to expand quickly: of the 60 million U.S. households that use Prime, just 22% shopped at Whole Foods in December. Two-hour deliveries could be the stimulus to get more people using the service, and also convince them to rely on it more wholeheartedly.

Jitendra Waral, a Bloomberg analyst, said: “one of the biggest things holding back online grocery is the option of free delivery and the speed.”

The fresh food delivery sector is the third that Amazon has sent worries through this month. The company has also made noises about innovating healthcare and delivery services, sending players in those sectors into panic mode. When it comes to groceries, it’s an area Amazon has been trying to crack for a decade, with little success thus far.

Disclosure

Dominion holds Amazon in its Global Trends Ecommerce Fund.


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