Amazon has unveiled its latest crack at the grocery market: Prime Pantry is a delivery service that can ship a box of groceries to your doorstep for the sum of $6. “Purchase everyday essentials in everyday sizes, from the convenience of your home,” runs the strapline of Amazon’s introductory video .
Launched last week, Pantry is available in the 48 contiguous states of the US (hard luck, Hawaii and Alaska), and offers around 2,000 SKUs, from boxes of cereal and confectionery to crisps and soft drinks. Customers can order up to 45lb of items – or until they fill the box. Amazon has measured the cubic volume of each item in the range so it can work out precisely how full the shipment is.
Pantry is part of Amazon’s drive to recruit Prime customers; for $99/year in the US, or £79/year in the UK, Prime gets you free one-day delivery on Amazon items, plus more Kindle downloads than you could possibly read in a lifetime, and unlimited streaming on the company’s new instant video service (formerly LoveFilm).
“[Amazon Pantry] is an attempt at building better economics around consumable categories which are less profitable to ship using Amazon’s conventional methods,” says Kantar Retail’s digital retail insights director Stephen Mader. Where before you would have had to order grocery items in bulk, Pantry will let you purchase a single item, for example. But it’s not exactly instant – orders will take four days to fulfil, as the service is currently operating out of only a small number of distribution centres nationwide.
“Amazon has been willing to take a loss to make shoppers’ lives easier,” Mader points out. But this time around, Amazon is managing its profitability a little more closely – the $6 delivery fee is in addition to the annual Prime subscription charge. “If Amazon is going to win in consumibles, it’s going to have to do it in partnership,” Mader adds. “This is a baby step in trying to convert suppliers.”
Whether its box delivery service will be enough to lure shoppers away from their local store remains to be seen. But Pantry is also part of the retail giant’s general drive into grocery – a category that remains a glaring omission in its otherwise bottomless pit of product lines; “Amazon’s dead-set on killing off the grocery store,” tech site Engadget put it last week. The Amazon Fresh same-day delivery service, available on the US west coast, is rumoured to be arriving in Germany as early as September this year, with Paris and London tipped to follow in early 2015.
The big four are already jockeying to be ready for Fresh’s arrival on these shores, with Morrisons going online, Asda adding features to its website, Sainsbury’s relaunching its ecommerce site, and Tesco making improvements to its back-end platform. Indeed it is the latter that has been making the most Amazon-like moves: its BlinkBox service and Hudl tablet are credible rivals to Prime Instant Video and the Kindle Fire, and it is steadily recruiting third-party sellers to Tesco.com. “Amazon are going to see a really big threat, especially from Tesco,” Mader says. “They need to come sooner rather than later, before they lose their competitive advantage.”
Pantry or not, Amazon’s prime time isn’t far away.
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