- Amazon is working on consolidating its two grocery delivery services, Amazon Fresh and Prime Now, according to Yahoo Finance, citing an unnamed source. The move seeks to streamline the company's delivery push from Whole Foods stores, and was behind the hundreds of layoffs the e-tailer announced last week.
- AmazonFresh, which offers groceries and perishable items to Prime members for an additional $15 per month for Prime members, launched in 2007, while Prime Now launched in 2014. In recent years, the overlap between the two services has increased. According to a survey by Morgan Stanley, 48% of Prime Now users order groceries through the service.
- There have been signs over the past few months that a consolidation of the two services was forthcoming. Last fall, Amazon scaled back AmazonFresh service in 10 states. Then in December, Stephenie Landry, who headed up Prime Now, was named head of AmazonFresh.
Amazon has not confirmed this news, and a representative did not respond immediately to Food Dive's request for comment, but officials in the past have discouraged the idea that it might merge its two grocery delivery services into one entity. Speculation ramped up last fall that Fresh and Prime Now could be consolidating after the e-tailer scaled back Fresh in several states.
In an interview with Recode, Prime Now head Stephenie Landry supported having multiple grocery delivery services under the company.
It does makes sense to keep Fresh and Prime Now, primarily because of the different ways each offers delivery. Both services offer shelf-stable as well as perishable groceries — Fresh offers more of the latter — but whereas Prime Now delivers on-demand from couriers, Fresh is more akin to Peapod and FreshDirect, utilizing refrigerated trucks and requiring customers to set delivery times. Each service appeals to different consumer needs and shopping styles.
Rather than doing away with one of the brands, it could be that Amazon is combining the teams to increase efficiency, and to make sure they work better together.
One of the biggest struggles for Amazon's grocery services has been a lack of distribution centers, and most notably cold storage facilities. With its Whole Foods acquisition, as many analysts have noted, Amazon has picked up hundreds of delivery points across the country. Stores can serve as distribution hubs for Prime Now couriers, while the grocers' distribution centers could supply AmazonFresh.
Last week, Whole Foods launched Prime Now delivery from stores in four cities, and noted it will expand to more markets throughout the year. There are further signs that Amazon is putting significant resources behind its Prime membership and Whole integration. Greg Greeley, vice president of Amazon Prime and delivery experience is spending more time working on Whole Foods' operations, according to CNBC.
When Amazon announced hundreds of layoffs last week at its Seattle headquarters, the news puzzled many who had followed the e-tailers rapid growth. But Amazon is razor-focused on efficiency, and as it grows its grocery delivery service at Whole Foods and beyond, it no doubt wants to streamline its operations as much as possible and do away with elements that don't work.