AmazonFresh rolls into San Diego
AmazonFresh, the Seattle-based retail mammoth's subscription grocery delivery service featuring bright green trucks, announced on Tuesday that it has expanded to San Diego this week.
Residents in certain ZIP codes now can bypass the traffic, aisles, lines and hauling associated with shopping for food and instead order online or via the AmazonFresh mobile app from some 500,000 grocery and household items on AmazonFresh and Amazon.com, from milk and eggs to books and electronics. That also includes products from favorite San Diego neighborhood shops like Eclipse Chocolate Bar & Bistro,Venissimo Cheese and Bird Rock Coffee Roasters. They can also order from specialty shops throughout Southern California, such asSanta Monica Seafood and Canter's Deli.
Analysts say now that many consumers are comfortable with shopping online for general merchandise, the next natural step is for them to embrace e-commerce for their grocery purchases.
San Diego consumers in qualifying ZIP codes will now have the option to pay $299 per year for access to AmazonFresh, which includes access to all Amazon Prime services and promises next-day and same-day delivery on grocery orders over $35. That won't be a tough threshold to hit, with organic red butter lettuce priced at $2.99 per head and 1 pound of broccoli crowns ringing up at $3.99. Prime members will be billed the full $299, but will receive a prorated rebate on their existing Prime accounts. They can first use a 30-day free trial to decide whether the price tag of AmazonFresh is worth it.
RetailNet Group analyst Justin Bomberowitz said last year that the grocery service, a bold move into an industry with notoriously micro-thin profit margins, is less about making money than about the retailer, boasting nearly $75 billion in net sales last year, connecting with consumers more frequently. And he foresees profit potential in Amazon bundling your grocery deliveries with your other Amazon.com orders as it continues growing its same-day delivery service by way of smaller distribution centers. And if drones can eventually do the delivering, so much the better.
Amazon has been testing and tweaking its grocery delivery business model in Seattle for the last seven years, eventually scrapping doorstep delivery fees in favor of the minimum-order threshold. In 2013, the company began expanding AmazonFresh gradually to parts of Northern and Southern California, specifically in the San Francisco and Los Angeles areas.
Starting immediately, the service is delivering to central San Diego neighborhoods like North Park, Middletown, Hillcrest and Golden Hill. Ocean Beach, South Park, City Heights and Mission Valley addresses also appear to be eligible, based on a test of various addresses on the website, and an Amazon spokeswoman said delivery will soon expand to parts of northern San Diego as well.
Morningstar analyst R.J. Hottovy said with more consumers embracing e-commerce for their general-merchandise purchases, it makes sense for retailers both online and offline to explore e-commerce options for groceries. AmazonFresh's launch into San Diego is a natural extension of operations in Los Angeles and Orange County, he said, as the program requires a different type of fulfillment center with refrigeration. That said, he has heard rumblings that the service could enter as many as 20 new markets this year, with big cities like New York and Chicago topping the aggressive expansion list.
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