An independent contractor wearing a protective mask and gloves loads Amazon Prime grocery bags into a car outside a Whole Foods Market in Berkeley, California, on Oct. 7, 2020.
David Paul Morris | Bloomberg | Getty Images
Amazon is rolling out same-day delivery of fresh foods to more pockets of the U.S. as it looks to encourage shoppers to add meat and eggs to their order while they’re browsing its sprawling online store.
The company announced Wednesday it’s bringing the service to more than 1,000 U.S. cities and towns, including Raleigh, North Carolina, Tampa, Florida, and Milwaukee with plans to reach at least 2,300 locations by the end of this year.
Amazon began testing the service in Phoenix last year and in additional cities this year, where it found shoppers frequently added strawberries, bananas, avocados and other perishables to their order.
“Many of these shoppers were first-time Amazon grocery customers who now return to shop twice as often with same-day delivery service compared to those who didn’t purchase fresh food,” the company said in a release.
The service is free for Prime members on orders over $25 in most cities, or for a $2.99 fee if an order doesn’t meet that minimum. Shoppers without a Prime membership pay a $12.99 fee to use the service, regardless of order size.
Grocery delivery company Instacart‘s stock tumbled more than 12% following the announcement. Shares of supermarket chains Kroger and Albertsons fell about 4% and 2%, respectively. DoorDash stock slid 4%.
Shares of Walmart, which has been racing to compete with Amazon on speedy deliveries and offers same-day shipping for groceries, slipped 2%.
“In our view, this represents an escalation of head-to-head competition between the two, with Amazon advancing grocery and rural investments whereas Walmart continues to build up its marketplace and advertising verticals,” Mizuho analysts wrote in a note to clients Wednesday.
Amazon has been retooling its grocery business over the past few years.
The company has tweaked its chain of Fresh grocery stores in a bid to attract more shoppers, and it opened up fresh food delivery to shoppers who aren’t Prime members.
It’s also looked to highlight its growing business selling household staples such as paper towels, cleaning supplies, bottled drinks and canned food.
In January, Amazon tapped Jason Buechel, the CEO of Whole Foods Market, the upscale grocer it acquired in 2017 for $13.7 billion, to lead its worldwide grocery stores business. Buechel announced in June that the company was bringing Whole Foods closer to the Amazon grocery umbrella as part of a reorganization.
Previously, Whole Foods had remained largely independent from Amazon’s own grocery offerings.