Just a few months after announcing the rollout of same-day delivery of perishable groceries, Amazon said it is seeing success with the initiative as it works to position its grocery business going forward.
“This is a game changer for customers who can now order milk alongside electronics, check out with one cart and have everything delivered to their doorstep within hours,” Amazon President and CEO Andy Jassy said on the Thursday third-quarter earnings call.
Giving customers the ability to order groceries alongside millions of products from Amazon.com and get them delivered together on the same day is “really changing the trajectory and the size of our grocery business,” he added.
“We started with a few markets about a year ago, and we were really taken aback at the adoption — not just the number of people that started buying perishables from us very quickly, but how often they came back downstream to buy perishables and groceries from us in the future,” Jassy said about the delivery option.
The same-day perishables delivery offering is currently available in more than 1,000 cities and will reach over 2,300 by the end of the year, he noted. Amazon is seeing groceries slot into orders for online customers “who are buying things like shampoo or detergent or paper cups or water” repeatedly.
“The ability to add milk and eggs and yogurt and other perishables to their order and have it live in the same shopping cart and then show up a few hours later is very compelling,” he said.
While Jassy did not specifically address Amazon’s struggles with its physical Amazon Fresh stores — the chain closed 14 stores in the U.K. earlier this year and has seen a touch-and-go expansion in the U.S. — he did acknowledge that e-commerce appears to be a key driver for Amazon’s fresh food sales going forward.
Jassy said that center store items, such as pet food, health and beauty, and canned foods, continue to see sales “grow at a very good clip” and account for a “good chunk” of the more than $100 billion of gross merchandising sales that Amazon’s grocery business, excluding Whole Foods Market, brought in over the last 12 months.
The Thursday night earnings call marked a shift away from Amazon’s typical practice of providing scant updates on its grocery business during investor calls.
Amazon’s grocery moves come at a time when the grocery shopping landscape has tilted in favor of mass retailers.
Jassy said Amazon is poised to win consumers through speed, low prices and convenience. A newly launched “add to delivery” button that lets customers add items to previously scheduled orders has already been used more than 80 million times, he said. Meanwhile, on the speed front, Amazon has started rolling out three-hour delivery in select U.S. cities, Jassy said.
“[The] tradition of the weekly grocery stock-up is changing and I think we’re a big part of that,” Jassy said. “And I think there’s a lot of potential there for the grocery side. It doesn’t mean that we won’t continue to experiment with other physical formats, but we’re on to something very significant with what we’re doing with perishables from our same-day facilities.”
