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What is Amazon Fresh?

Online Grocery Shopping is poised to continue growing at a rapid pace over the next decade. Only a small percentage of grocery spending occurs online – at about 3% but that is expected to change drastically. A variety of platforms are trying to get ahead on that change like Amazon Fresh.

The Food Marketing Institute expects that as much as 70% of U.S. consumers will regularly be buying their groceries online in just 5-7 years. There are a variety of platforms out there for consumers to choose from. We are going to focus on the Amazon platform and talk about how the eCommerce giant is getting ready for it with Amazon Fresh.

What is Amazon Fresh?

Online Grocery Shopping is poised to continue growing at a rapid pace over the next decade. Only a small percentage of grocery spending occurs online – at about 3% but that is expected to change drastically. A variety of platforms are trying to get ahead on that change like Amazon Fresh.

The Food Marketing Institute expects that as much as 70% of U.S. consumers will regularly be buying their groceries online in just 5-7 years. There are a variety of platforms out there for consumers to choose from. We are going to focus on the Amazon platform and talk about how the eCommerce giant is getting ready for it with Amazon Fresh.

How does the Amazon Fresh Program Work

Amazon is one of the two ways that you can get purchase your groceries online from Amazon. It has its roots in a beta test that Amazon began in August 2007 delivering groceries to customers doors in a limited service area. Amazon fresh gives customers the option to have their groceries delivered or to pick them up at specific retail locations.

The goal of Amazon Fresh was to make the grocery shopping experience easier for customers – particularly in large cities where grocery shopping can be difficult and extremely time consuming. The Amazon Fresh Pickup locations are currently only running in Seattle, but the Amazon Fresh Delivery service is available in most major cities in the United States. Amazon Fresh can be a great way to get your food brand in front of a large number of customers since the program is only available in high population areas.

Who Can Buy Products on Amazon Fresh

Amazon Fresh is only available to Amazon Prime members. A potential customer would first need to sign up for an Amazon Prime account which costs $119 a year. There is then an additional fee of $14.99 per month to get the Amazon Fresh program added to your Amazon Prime membership. Amazon typically provides free shipping on orders over the local delivery threshold. However, orders under the threshold will cost customers and additional $9.99 delivery fee.

The fees may seem prohibitive. It also may seem that there is limited opportunity for you as a vendor to grow on Amazon Fresh. However, when considering the sheer size of the existing Amazon Prime memberships the program seems destined to grow and be successful in the long run. It is estimated that 63.9 million households in the U.S. will have Amazon Prime Memberships by the end of 2019. That’s greater than 50% of U.S. households.

Those numbers are expected to reach 71.7 million households and 56.9% by 2021.

What Delivery Options Does Amazon Fresh Have

The Amazon Fresh Delivery program gives members a few options to choose from. Amazon Fresh can deliver products on the same day or with next day delivery in most major metropolitan areas. Amazon gives you two additional delivery receiving options.

You can select Attended Delivery to reserve a delivery time for your products to ensure that you are there when the groceries arrive. If your schedule does not allow you to be home you can also select Doorstep Delivery. This ensure that your groceries are delivered within a three-hour window and you do not need to be there to receive them.

Previously, Amazon partnered with the United States Postal Service to bring delivery services to more areas. The partnership did not work. USPS had to many late or missed deliveries which led to a lot of customer complaints. Amazon ended up shutting the partnership down because of that.

Where is Amazon Fresh Available

Amazon is continuing to add additional cities into the Amazon Fresh program. They allow customers to easily check if Amazon Fresh is available in their city by entering their zip code. The program has also expanded beyond the United States and Amazon Fresh is also available in London, United Kingdom. The current U.S. cities that have Amazon Fresh are Boston, Baltimore, Dallas, Chicago, New York, Los Angeles, San Francisco, Seattle and more.

Differences Between Amazon Fresh and Amazon Prime Pantry

Amazon Fresh is not the only grocery program at Amazon. Another program called Amazon Prime Pantry was created in 2014 to serve Amazon Prime Members. Amazon describes the program as a place where “Prime Members can shop for groceries and household products in everyday package sizes”. There are significant differences between Amazon Fresh and Amazon Prime Pantry however.

While Amazon Fresh members need to pay additional to get their groceries Amazon Prime Pantry is included in each Prime Membership. Amazon Prime Members do need to pay an additional fee of $4.99 per month to receive free shipping on all their purchases of $10.00 or more. If an order is under $10 than they need to pay a $5.99 shipping fee.

The variety of products on offer are very different between the two grocery programs. Amazon Fresh offers perishable items and requires the products to be packaged differently to ensure they are consumed safely. Prime Pantry offers mainly non-perishable items and household products. Prime Pantry does not have any produce, meats or fish so the amount of grocery shopping you can truly do through that program is limited.

There are also significant delivery differences between Amazon Fresh and Prime Pantry. As we said before, Amazon Fresh has same day and next day delivery available. Amazon Prime Pantry orders are just normal Amazon orders – but Amazon cannot guarantee 2-Day delivery on Prime Pantry orders. Depending on the size of the order and products it may take longer than the normal 2-Day Delivery Prime Members enjoy.

Getting into eCommerce Now for Your Grocery Brand

The opportunities in eCommerce for grocery are incredible. While the total sales now may be puny, the upside of the expected growth is a massive opportunity. Moving your grocery brand from only retail locations to having an eCommerce presence will be key for continued growth moving forward. Selling on the largest eCommerce platform – Amazon – will help position your brand for success.

While many vendors have been kicked off Amazon Fresh with the Wholefoods acquisition, there are still other options for competing on the Amazon platform. Let us help you find the best strategy for getting your grocery products selling on Amazon.[/vc_column_text][/vc_column][/vc_row]