• by Thom Forbes  @tforbes, February 9, 2018

Amazon is offering free — but don’t neglect to tip the driver — two-hour delivery of a swath of Whole Foods products in Austin, Cincinnati, Dallas and Virginia Beach to Amazon Prime members as of yesterday and it plans to expand the program “across the U.S.” sometime this year. Orders must be above $35; delivery within one hour will cost $7.99.

Consumers can use the PrimeNow app for iOS or Android to shop for items including produce, meat and seafood, everyday staples and other locally sourced items at www.primenow.com or by using the Prime Now app available for Android and iOS devices, according to the release announcing the initiative. The service is available from 8 a.m. to 10 p.m.

“What took Amazon so long?” asks Forbes contributor Phil Lempert, possibly echoing your own thoughts. “About 90% of the 90+ million Amazon Prime shoppers are estimated to live within 10 miles of a Whole Foods store. So it was a no-brainer that the company would use the stores to build a more efficient food delivery platform to serve their current members — and no doubt along the way pick up new Amazon Prime members.”

As well as to squelch the competition.

“The grocery-delivery business — though an expensive endeavor for retailers — has become a hotly contested space in recent years, as companies compete to relieve shoppers of one of the few chores many do once a week, if not more: buying food. Walmart, the country’s largest grocer, has aggressively expanded its buy-online-pick-up-in-store option throughout the country and is eyeing same-day deliveries in New York. Others, like Costco and Target, are also rolling out grocery-delivery services in hopes of tapping into a growing pool of convenience-minded shoppers,” observes Abha Bhattarai in the Washington Post, another outpost in Jeff Bezos’s growing empire. 

Bhattarai points out that Austin is Whole Foods’s hometown and rival Kroger is based in Cincinnati. 

But “Amazon has struggled in recent years to make its grocery delivery business work. Its grocery delivery arm, AmazonFresh, was scaled back late last year, ending service in some ZIP Codes. The company’s acquisition of Whole Foods was viewed by some analysts as a way to help address some of those challenges,” writes Laura Stevens for the Wall Street Journal. 

“… Already Amazon pairs with grocer Sprouts Farmers Market Inc. and other outside retailers and restaurants in some markets to offer speedy deliveries” and Stephenie Landry, the Amazon vice president who oversees Prime Now, tells Stevens those partnerships will continue.

“The opportunity [for Amazon] is enormous: to make the same waves it made in books and electronics, it would have to persuade millions of customers to start ordering their groceries online,” writes Elizabeth Weise for USA Today. “While Americans don't necessarily shop at Amazon every week, they buy food every few days. Getting those customers to link Amazon and groceries could further tie it into the nation's shopping habits and give it a bigger chunk of the more than $600 billion U.S. grocery market.”

According to Walker Sands Future of Retail 2017 data, only 16% of consumers have purchased groceries on Amazon this past year.

“We could see this number spike if Amazon rolls out nationwide delivery,” the Chicago-based public relations agency says. “Consumers say they would purchase more groceries online if it was less expensive (40%) and if delivery times were more convenient (23%), but Amazon’s price cuts at Whole Foods coupled with fast delivery options baked into Prime membership addresses the top consumer barriers for adoption.”

“One of the most exciting things is the potential of adding the Alexa-enabled appliances to the mix, as well as Amazon Key,” Greg Ng, VP of digital engagement, PointSource, a Globant company, observes in an email. “The addition of AI into the analyzation of food usage patterns can mean huge things along the supply chain. In theory, fewer products go bad sitting unpurchased in the store shelves or uneaten in your fridge.”

In other Whole Foods by Amazon news, the Wall Street Journal’s Heather Haddon and Sarah Nassauer report the grocer “is asking suppliers of all sizes to pay new rates for prime shelf space as it tries to boost profits and better organize the exploding number of natural and organic products hitting the market.” They are also “asking suppliers to offer bigger discounts on their products to earn the space.”

Plans to implement the changes predate Amazon’s acquisition and are long overdue, Whole Foods executives maintain.