Amazon.com Inc. (AMZN) plans to start offering super-quick deliveries of Whole Foods groceries to its Prime members.
In a statement, the online retail giant confirmed that the one-hour and two-hour Prime Now delivery services will first be made available to customers in Austin, Cincinnati, Dallas and Virginia Beach.
Under the scheme, which Amazon plans to expand across the rest of the U.S. later this year, Prime members will receive their Whole Foods orders in two hours at no extra cost. Subscribers who want their groceries to arrive sooner will be charged $7.99 for one-hour delivery on orders of $35 or more.
The new service will be available from 8 a.m. to 10 p.m., Amazon said in the statement. Subscribers can visit www.primenow.com or download the Prime Now app to see if the rapid-delivery option is available in their area.
“We're happy to bring our customers the convenience of free two-hour delivery through Prime Now and access to thousands of natural and organic groceries and locally sourced favorites,” said John Mackey, Whole Foods Market co-founder and CEO. “Together, we have already lowered prices on many items, and this offering makes Prime customers’ lives even easier.”
Amazon acquired Whole Foods last year for $13.7 billion and has since been exploring ways to integrate its new business. So far, the e-commerce giant has moved to cut prices and sell some of its other products, such as its Echo smart speaker, in Whole Foods stores.
CNBC recently revealed that almost 70 percent of the acquisition price for Whole Foods was allocated to goodwill. That development, brought to light by an annual report published by the company last week, indicates that over $9 billion of the total $13.7 billion that Amazon paid for the healthy foods grocer is based on its potential for future growth. Only 30 percent, or about $4 billion, was spent on existing assets, such as stores and business relationships. (See also: Amazon Paid $9B for Whole Foods' Goodwill: CNBC.)
This revelation suggests that Amazon is confident that it can significantly grow the organic supermarket. It also means that failure to achieve its goals will force the online retailer to write off the goodwill and take a huge hit to its profits in the process.
Last month, Amazon raised its monthly fee for Amazon Prime by $2. The price hike, the company’s first in four years, was targeted at subscribers who pay for the service on a monthly basis. (See also: Amazon Prime Price Hike Will Bring in $300M More Annually: Cowen.)