Amazon to expand same-day grocery service to 2,300 cities – sinking shares of rivals Walmart, Instacart

Amazon is going all-in on its supermarket business with a massive expansion of same-day delivery of perishable items like milk and fruits — sending shares of rivals including Walmart and Instacart plunging.

The e-retail giant, founded by Jeff Bezos, announced Wednesday it will offer the same-day services in 2,300 cities by the end of the year, more than double the current 1,000 locations where Amazon Prime members can order items like milk, fruits and baked goods.

The service — already available in Manhattan and other major cities including Phoenix, Ariz., Orlando, Fla. and Kansas City, Miss. — is free for Prime members on orders over $25 in most participating cities. It costs $13 for non-members regardless of order size.

“This marks a major expansion for Amazon’s digital grocery service, largely because it’s being offered to its massive Prime member base at no additional cost,” said Blake Droesch, analyst with eMarketer.

“Notably, Amazon has lowered the minimum order threshold to just $25 — a move that directly threatens Instacart by enabling customers to use Amazon for quick, one-off purchases, a core part of Instacart’s value proposition.”

Instacart shares were down nearly 11%, while rivals DoorDash and Uber sank 4.8% and 1.8%, respectively, as of 1:30 p.m. ET. 

Shares of grocery giants Kroger, Walmart and Ahold Delhaize, which owns Stop & Shop, also plummeting — by 4.3%, 1.9% and 0.7%, respectively.

Walmart’s membership service, Walmart+, costs $98 a year and offers same-day delivery in under three hours — with some orders arriving in as little as 30 minutes.

Amazon shares were up 1% on Wednesday

The company, which owns Whole Foods and Amazon Fresh, said the same-day service complements its existing grocery offerings.

“We’re continuously innovating to make grocery shopping simpler, faster, and more affordable for our customers, especially Prime members,” Doug Herrington, chief executive of Worldwide Amazon Stores, said in a statement.

“They can order milk alongside electronics; oranges, apples, and potatoes with a mystery novel; and frozen pizza at the same time as tools for their next home improvement project – and check out with one cart and have everything delivered to their doorstep within hours.”

Amazon said its grocery expansion will focus on value as customers look “to make their budgets stretch further.”

The expansion comes after a blowout earnings period for the food-delivery sector, which held onto customers even as economic anxiety plagued other industries.

In June, the company said it is investing $4 billion to bring same-day and next-day delivery services to more than 4,000 rural US communities by the end of the year.

Earlier this year, CEO Andy Jassy said he’s “very bullish” about Amazon’s grocery business – after years of hitting speed bumps.

Since its 2017 acquisition of Whole Foods, Amazon has attempted to push further into grocery stores with retail locations and a separate app for grocery delivery, but both have floundered. 

At one point, Amazon offered Prime members free same-day delivery from Whole Foods Market. The company now charges a $9.95 service fee for all Whole Foods deliveries.