No More Upfront Fee For Amazon Fresh Same-Day Delivery

There are a number of retailers that would like to be ahead of Amazon. Yet, when the e-retailer shows it's moving on from not only expanding Same-Day Delivery with online products to same-day groceries AmazonFresh also, it's clear that the momentum of Amazon is dominating and just too hard to slow down.

The latest move from Amazon to expand AmazonFresh is not to the service itself, but the pricing model. Recode.com recently reported how Amazon is eliminating AmazonFresh upfront costs for members in an effort to attract shoppers to using it. The service use to be $299 per year, yet now will be $14.99 per month for existing Prime members only. This equates to $179 annually, which is a $120 difference from the $299 AmazonFresh yearly subscription. When a Prime members add in their $99 annual fee, their overall annual cost is only $279 annually with both services, instead of the $299 for just AmazonFresh. This is an impressive selling point for loyal Prime members that felt the upfront costs made AmazonFresh a little steep.

Subscription programs are being piloted by other big name retailers to compete with Amazon, in addition to a way to build customer loyalty online. Wal-Mart is rolled out testing for its' new ShippingPass service in July, offering free shipping with two-day delivery with a low annual $49 fee. This low-cost fee significantly lower than Amazon's, being half the cost and appears to be designed to attract shoppers with market entry pricing for the new program. Customers can go to WalMart.com and get a variety of products, including clothing, electronics, health products, and more. The online items with the ShippingPass logo next to them are eligible for the service.

Keith Anderson, vice president of e-commerce analytics startup company Profitero, commented on the upfront fee change. He stated, “This positions Fresh much more favorably. An incremental, annual $199, paid up front, was unprecedented and a huge hurdle for mainstream households to commit to, even if Prime members skew to affluence.” Having an upfront fee to get groceries just may not be sustainable for Prime members and regular shoppers, which has an adverse effect on the purpose of a subscription program. Valued-added services, coupled with low cost and convenience is what not only attracts online customers, but keeps them.

Anderson also commented on what the new fee structure means for Amazon. "[T]he change in fee structure could be a sign that Fresh is stabilizing and poised for more aggressive expansion. This is supported by how prominently the new fee is being promoted on Amazon's homepage in markets where Fresh is available.” When a huge cut in fees is implemented like Amazon has done, it affirms that there will be a strong customer base and volume for growth, especially with free same-day delivery already in place in major cities nationwide. It's only a matter of time that AmazonFresh will be close behind.

As the holiday season approaches, other grocery chains are taking their same-day grocery service to another level, namely Whole Foods partnering with Google to expand. Any retailer seeking to grow online with same-day delivery, needs to have a optimal and fast order fulfillment system in place to get deliveries done on time. A Same-Day Courier like A-1 Express can develop a sound same-day delivery system within major US cities, bridging store and online products. The Orlando Courier is a partner with the type of courier expertise retailers like Wal-Mart could utilize to pick up and delivery groceries from local stores nationwide.

Reference: 10.7.16, www.recode.net, Jason Del Rey, Amazon finally just proved it’s very serious about grocery delivery