Amazon grocery expansion is making headlines, but it’s not yet the knockout blow many expected for traditional rivals. While the tech giant is pushing hard into same-day delivery of fresh groceries, competitors still hold important advantages such as selection, store presence, and customer loyalty.
In August, Amazon revealed a major step forward in its grocery strategy. Prime members in over 1,000 U.S. cities can now order fresh groceries such as meat, produce, dairy, and frozen items for same-day delivery. The service is set to expand to 2,300 cities by the end of the year.
Amazon also lowered the minimum order for free delivery. Prime members now need only $25 in their cart, down from $100. Orders below that threshold cost $2.99 for Prime members, while non-Prime customers pay a flat $12.99.
This change plays to Amazon’s strengths: a huge logistics network and nearly 200 million Prime subscribers in the U.S. By combining fast delivery with everyday essentials, Amazon wants to make grocery shopping as simple as ordering books or electronics.
The announcement quickly shook the grocery and delivery market. Instacart shares tumbled by double digits, DoorDash lost close to 8%, Kroger’s stock dipped by around 2–4%, and even Walmart, the largest U.S. grocer, saw a small decline.
The market’s reaction shows how serious Amazon’s grocery push is. Competitors that rely heavily on delivery models, such as Instacart and DoorDash, face the most direct threat. Amazon’s approach integrates groceries with its wider marketplace, making it easier for customers to order food alongside household goods or entertainment products.
Amazon already excels in logistics. By offering same-day delivery of fresh foods alongside non-grocery items, it delivers unmatched convenience. A customer can order vegetables, snacks, and batteries in a single checkout.
The company’s biggest weapon is Prime. With tens of millions of loyal subscribers, Amazon can quickly push grocery services into households that already rely on its streaming, shopping, and delivery benefits. Even modest use of grocery services could boost Amazon’s annual revenue by billions.
Reducing the free delivery threshold to $25 makes it more affordable than before. It also undercuts many delivery competitors who rely on higher order minimums or additional service fees.
A typical U.S. supermarket carries more than 30,000 products. Amazon currently offers only “thousands” of fresh items, which is far from a complete grocery experience. Shoppers who want variety or specialty items still prefer established supermarkets.
Amazon Fresh operates only a few dozen physical stores. In contrast, Walmart runs about 4,600 stores in the U.S. and offers grocery delivery to nearly every household. Kroger and regional chains also have thousands of locations that double as order fulfillment hubs.
Grocery shopping is personal. Customers want to see and touch their produce or pick out the best-looking cuts of meat. Amazon must still prove that its quality matches or exceeds what shoppers expect from traditional stores.
Handling perishables is complex. Amazon has roughly 1.5 million square feet of refrigerated warehouse space, while Walmart has nearly 20 million. This gap shows the scale of investment Amazon must make to truly compete.
Amazon’s test run showed encouraging signs. In pilot markets, about three-quarters of customers who ordered perishables were doing so for the first time. Around one in five returned for another grocery order within a month.
Investors are optimistic about these numbers. Analysts say grocery delivery could become a meaningful new growth engine for Amazon, particularly if customers begin adding groceries to their regular shopping routines.
Still, e-commerce penetration in groceries remains relatively low. The majority of U.S. consumers continue to shop in stores, where they enjoy the experience, immediate fulfillment, and greater variety. Amazon’s challenge is not just logistics but also changing customer habits.
To reach its goal of 2,300 cities, Amazon must invest heavily in refrigerated storage, delivery vans with cooling systems, and packaging innovations. It will also need to keep improving product quality to gain customer trust.
Walmart, Kroger, Instacart, and DoorDash are unlikely to stand still. They could expand same-day services, strengthen loyalty programs, or use their physical stores more aggressively as fulfillment centers. Traditional grocers may also lean into fresh quality, prepared foods, and in-store experiences—areas Amazon still struggles with.
Busy urban households may welcome Amazon’s quick delivery for top-up grocery orders. Suburban families, however, might still prefer large weekly shopping trips at physical stores. The market could end up splitting, with Amazon dominating convenience-driven shopping while rivals focus on larger, price-conscious baskets.
By integrating groceries into Prime, Amazon increases customer stickiness. A member who relies on Prime for entertainment, shopping, and groceries is less likely to cancel. This deep ecosystem connection is what makes Amazon such a formidable competitor.
Amazon grocery expansion is not a knockout blow to rivals, but it is a strong jab. With lower delivery thresholds and same-day service for perishables, the company is positioning itself as a serious contender in the food market.
Yet, the road ahead is not simple. Amazon still trails in store presence, product variety, and fresh-food credibility. Traditional grocers such as Walmart and Kroger retain deep advantages, and delivery apps like Instacart will fight hard to stay relevant.
For now, Amazon is a growing threat rather than a grocery giant. But as it expands to thousands of cities and continues improving its logistics, the balance of power in the grocery industry may shift dramatically over the next few years.
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