Amazon to Deliver Whole Foods Groceries

02/08/18 12:14 AM EST
By Laura Stevens 

Amazon.com Inc. said it would start delivering Whole Foods groceries via its fastest delivery option in four markets, marking the first major integration between its e-commerce operations and its new brick-and-mortar grocery chain.

The online retail giant will add Whole Foods to its one- and two-hour delivery option, Prime Now, in the grocer's hometown of Austin, Texas, as well as Dallas, Virginia Beach, Va. and Cincinnati, Ohio.

Stephenie Landry, the Amazon vice president who oversees Prime Now, said it plans to expand the effort, but declined to say how quickly. She noted that Prime Now grew to more than 50 global markets in less than three years following its creation.

Amazon's latest move is one of the first to potentially take aim at major grocers racing to offer deliveries and pickups to better compete with Amazon, along with rival online delivery services like Instacart Inc., which currently delivers from Whole Foods. Grocer stocks were hit hard by the news of Amazon's decision to purchase Whole Foods last summer, with six major food retailers losing roughly $12 billion in value after the deal's announcement.

Still, Amazon has struggled in recent years to make its grocery delivery business work. Its grocery delivery arm AmazonFresh was scaled back late last year, ending service in some ZIP Codes. The company's acquisition of Whole Foods was viewed by some analysts as a way to help address some of those challenges.

Analysts have largely expected Amazon to start offering Whole Foods deliveries since the roughly $13.5 billion deal was announced. Already Amazon pairs with grocer Sprouts Farmers Market Inc. and other outside retailers and restaurants in some markets to offer speedy deliveries.

Ms. Landry said those partnerships will continue.

For the new Prime Now deliveries, employees will pick the orders in store from the shelves as they come in. Customers will be able to select from a variety of fresh produce and proteins, and some in-store items won't be available. Prices may also differ.

Prime Now is available only to the company's Prime members, who typically pay $99 annually. Two-hour deliveries are free on orders over $35, but tips are suggested for drivers. One-hour delivery costs $7.99.

Amazon has previously lowered prices at Whole Foods and started offering some of the grocer's private label brands on its website and via Prime Now. It also plans to introduce benefits for members of its Prime program.

Ms. Landry said that Whole Foods and Amazon have been partnering on the Prime Now initiative, allowing Amazon to take advantage of the grocers' marketing expertise and in-store operations.

"You're going to continue to see us doing lots of things together," she added.

--Heather Haddon contributed to this article

Write to Laura Stevens at laura.stevens@wsj.com

 

(END) Dow Jones Newswires

February 08, 2018 00:14 ET (05:14 GMT)

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