Amazon recently announced that it will soon charge customers for food delivery from Whole Foods Market. The charges are set to begin on August 30 of this year. The move could serve to benefit Walmart, as the latter business offers Walmart+ delivery as a free service to all its members.
Beginning on August 30th, Amazon will start charging its customers $9.95 for every time it delivers them an order from Whole Foods Market. The company will begin assessing its new fee program in seven markets. These include:
The purpose behind the charge is to “cover operating costs, so we can continue to offer the same competitive everyday prices in-store and online.” Amazon favored moving forward with the fee as opposed to cover costs by raising prices. Customers are still free to pick up their online orders at Whole Foods at no extra charge.
One result of the pandemic has been an increase in e-commerce sales for groceries. While sales were already growing prior to the outbreak of COVID, the virus rapidly accelerated them. Data from Mercatus and Incisiv shows that online grocery sales as a percentage of the overall grocery market grew from 3.4% to 10.2% in 2020 and totaled $106 billion. Analysts believe e-commerce sales will account for about 21% of total grocery sales by 2025 and total around $250 billion.
It will be interesting to see how Amazon’s new charge will pan out for the company. The business tried fees for delivery in the past with Amazon Fresh and it had varying degrees of success.
The move could serve as an opening for Walmart. Keep in mind that the latter business offers Walmart+ grocery delivery as a free service for all its members. We’ll continue to monitor Amazon’s fee and provide updates where appropriate.
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