Amazon is adding deliveries from local grocers Uwajimaya and PCC Natural Markets to its Prime Now fast-delivery service in Seattle.
Amazon is adding Uwajimaya and PCC Natural Markets to its Prime Now fast-delivery service in Seattle.
The addition of the local grocers follows similar moves by the giant retailer in Chicago, Los Angeles, San Diego, Portland and Manhattan.
Two-hour deliveries are free to subscribers of Amazon’s $99-a-year Prime membership, and one-hour deliveries cost $7.99. The Prime Now service can only be summoned through an app for Android or Apple’s iOS.
Prime Now is one of Amazon.com’s approaches to providing quasi-immediate gratification to customers — and carving out a big chunk of transactions across the retail spectrum.
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This latest Prime Now venture is a new take on the supermarket business, which Amazon has been trying to crack since 2007, when it launched AmazonFresh in Seattle.
Since last year, that service, which involves delivery of groceries directly sold and fulfilled by Amazon, requires an upgraded annual Prime membership that costs $299.
Amazon is also pursuing the grocery industry on a global basis. Last month, it made a deal with U.K. supermarket giant Morrisons to procure food for delivery through Prime Now and its Pantry home-essentials delivery service.
Analysts with Cowen & Co. say Amazon’s multipronged approach to the business could give it a much bigger chunk of what in the U.S. was a $795 billion grocery market.
The U.S. online grocery market is estimated to be about $33 billion in 2016, but is poised to grow as younger people shop online at twice the rate of average consumers. Cowen predicts Amazon will be among the top 10 purveyors of food and beverages in the U.S. by 2019 (it’s not in the top 20 now).
In Seattle, Amazon already does fast delivery from local restaurants, such as Cactus, Skillet and Wild Ginger, as well as “tens of thousands” of merchandise items from the Amazon.com site, including alcoholic beverages.
The new grocery-delivery service works as follows: When a customer places an order through Prime Now, a team of shoppers at the local stores goes through the aisles picking the requested items, and passes them on to a team of drivers.
The financial terms of the deals between Amazon and the grocers were not disclosed.
“Amazon does the hard part,” said Cate Hardy, CEO of PCC Natural Markets, a co-op specializing in organic products, said in an interview. “We are just making sure that our shop is fully stocked.”
Hardy says that she hears often from customers who want a PCC store in their neighborhood.
Being available through Amazon Prime Now “allows us to bring PCC to nearly all households” in the Seattle area, she said.
Uwajimaya President Denise Moriguchi said the emporium, founded in 1928 and specializing in Asian products, is a destination for many of its customers, some of whom drive an hour to reach one of its four stores. “We feel like delivering products through Amazon Prime Now is like making it a neighborhood store,” she said.
Uwajimaya already was part of the Prime Now service offered in the Portland area, with items delivered from its store in Beaverton, Ore.
Moriguchi said it’s been a boon for Portland customers reluctant to cross a bridge to go shopping, resulting in incremental sales.
Both stores also partnered up last year with Instacart, although Uwajimaya’s Moriguchi said her stores no longer offer delivery through that service.
PCC’s Hardy says the Instacart experience showed that adding an online delivery component resulted in incremental sales, not in cannibalization.
“I firmly believe there will always be a place for stores like PCC that have value, have a heart and soul,” Hardy says. “The convenience of online shopping and delivery in our space is an augmentation of the full experience.”