Following last week’s coverage of OpenAI’s move into local grocery delivery, a different player is making high-stakes moves in the category. Amazon has announced that its Same-Day Delivery services will add fresh groceries in 2,300 cities and towns throughout the U.S., and more to come in 2026.
As background, Amazon added perishables to its Same-Day delivery program in August. Today’s move expands its service area and eligible products. Involving produce, meat, seafood, baked goods, and snacks, this is a direct shot at the Instacarts of the world, as well as budding efforts such as Walmart+.
The geographic expansion of the program brings this growing list of everyday items to U.S. consumers through Amazon’s “specialized temperature-controlled fulfillment network.” It also boasts a six-point quality check at departure and arrival – likely to mitigate consumer resistance for perishables delivery.
As for pricing and specs, same-day delivery is free for orders in excess of $25 for Prime members. For orders that don’t reach that threshold, the same-day option is available for $2.99. And for non-Prime members, same-day delivery is still offered but it will run you $12.99 regardless of order size.
This expansion is also demand-driven. Amazon reports that fresh groceries make up nine of the top 10 most ordered items for same-day delivery. Perishables have also grown 30x since January, while users who add groceries to their broader same-day Delivery orders shop at 2x frequency.
Devastating Competitor
That last part essentially answers the next logical question to arise: Why? If Amazon’s expansion to perishables in Amazon Same-Day Delivery orders can increase basket sizes and frequency, it’s a good way to amortize per-delivery fixed costs (driver salaries, fuel, etc) over a larger revenue base.
That cart-boosting play could include lots of non-grocery categories – from electronics to apparel. And those are the areas that hold greater per-unit margins for Amazon. So on some levels, the low-margin and race-to-the-bottom domain of local grocery delivery could be a loss-leader for Amazon.
Beyond the loss-leader angle, this move is classic Amazon in terms of operating at razor-thin margins but at an extreme scale that yields worthwhile absolute revenue figures. That makes it a devastating competitor for smaller-scale players that can’t offer the same margin-thinning features and pricing.
Meanwhile, it’s also worth noting that this move comes shortly after Amazon Same-Day Delivery launched the separate but related promise to deliver some products in 30 minutes or less in some locales. But given Amazon’s logistical complexities and signature master planning, you can bet that all these moves are interrelated.
Lastly, stepping back, the combination of this move, last week’s coverage of OpenAI’s grocery play, and other things we’re tracking, signals a sort of revival in the mature local on-demand category. But then again, AI is driving a reset and reshuffling across several sectors that are rushing to integrate it.
Header image credit: Andrew Stickelman on Unsplash
