Amazon (AMZN) is an ecommerce site started by Jeff Bezos in 1994. The website operates internationally and is known for providing quick service and innovative products. Popular Amazon products and services include the Amazon Kindle (an e-reader/tablet), Amazon Prime (a lower shipping rates membership service) and Prime Music and Amazon Instant Video (streaming sites).

Amazon Fresh, a grocery delivery company that operates in parts of Seattle, Los Angeles, New York, and New Jersey, is a new service from the ecommerce giant. 

The Consumers

Using Amazon Fresh is simple: Customers use the Amazon Fresh app or head over to fresh.amazon.com, log-in, and start shopping. Consumers can choose an “Attended Delivery,” where groceries are delivered in plastic bags and must be received by the consumer, or an “Unattended Delivery,” where the food is delivered to a consumer’s doorstep in temperature-controlled tote bags.

Same day and next morning delivery is available and, for consumers who spend more than $50, delivery is free. Along with groceries, Amazon Fresh delivers toiletries and prepared meals.

History and Competition

It may be surprising, but Amazon is not the first company to dream up a fast grocery delivery service. Since the mid-1990s, companies like Webvan and HomeGrocer have been shipping food to hungry customers. Today, most brick-and-mortar grocery stores will offer delivery service (provided you do the actual in-store shopping) and, in New York City alone, there are three major competitors to Amazon Fresh: Fresh Direct, Peapod, and Instacart.

So how do these competitors stack up to Amazon Fresh? Bloomberg did a comparison of the four companies and concluded that Amazon Fresh is the cheapest service in the New York area. Amazon Fresh is also well-rated on the Amazon website and on Yelp. The main problem that consumers seem to have is price.

Prices

How much would you pay for the convenience of having groceries delivered to your door? For some people, the cost might be too prohibitive but, for a new mom or busy worker, $299/year might be an acceptable price to pay. It should be pointed out that this fee also includes Amazon Prime and its associated benefits.

For the first 90 days, the $299/year price tag is waived for Amazon Prime customers. This free trial has two benefits for Amazon Fresh: First, customers have the opportunity to get hooked on the service and continue their subscription. Second, customers who have been using competing services can try Amazon Fresh risk-free and do their own comparisons as to the quality of the groceries delivered and the service received.

The Future

Amazon has integrated two new products to work in conjunction with Amazon and Amazon Fresh. The first is Amazon Dash. Amazon Dash is a device that customers use to order their groceries on Amazon Fresh via speech or barcode scanning. The device connects to the Amazon Fresh app or website via wifi and customers can review the products that they have requested before placing an order. The device is available by invitation only and is helpful for people who can never seem to remember their grocery lists.

The second device is the Amazon Dash Button. Considered at first to be an April Fool’s joke, the device is mounted in a convenient place and programmed to order a certain product (soap, cereal, razors, etc.). When pressed the product is ordered and automatically shipped to the customer’s door. The Amazon Dash Button, like Amazon Dash, is still by invitation only.

The Bottom Line

Amazon is a widely successful company that is almost impossible to avoid. With an impressive infrastructure already established throughout America and same-day delivery available in certain markets, it seemed inevitable that Amazon would enter the grocery market. Amazon Fresh will soon celebrate eight years since its 2007 debut in Seattle, and with a proven record of good customer service and the backing of Amazon’s money, it's likely to run for a long time.