Amazon Boosts Customer Reach With Grocery Services Expansion

Amazon (NASDAQ:AMZN) is making every effort to disrupt the grocery retail space on the back of its strengthening grocery services and robust Prime services.

This is evident from the company’s latest move of extending reach to more U.S. grocery shoppers with the aid of its grocery delivery and pickup service.

Notably, the company has rolled out delivery service of natural and organic products such as meat and seafood, fresh produce and staples from Whole Foods Market (NASDAQ:WFM) to additional cities of the United States namely Lexington, Little Rock, Charlottesville, Asheville, Columbia, Manchester, Savannah, Naples and Mobile.

Additionally, the company launched its grocery pickup service in the city of Columbus.

The move will enable Prime grocery shoppers at Whole Foods stores in the above-mentioned cities to avail the company’s fast delivery and pickup service via Prime Now. Further, Amazon with its latest move extends its grocery delivery and pickup services across 75 and 30 U.S. metro places, respectively.

This in turn is likely to help Amazon in attracting more customers to join Prime which will expand subscriber base.

Intensifying Grocery Battle

Amazon’s strengthening grocery services are giving a tough competition to major players in the U.S. grocery market like Walmart (NYSE:WMT) , Target (NYSE:TGT) and Kroger (NYSE:KR) .

However, these retailers are also ramping up their initiatives to strengthen grocery services in order to counter the threat from Amazon.

Walmart currently offers grocery pick-up and delivery services at 2,100 locations and 800 locations, respectively. Further, it is gearing up extend pick-up service to 3,100 locations and delivery service to 1,600 locations by 2020.

Further, the company acquired Parcel to support its same day delivery initiative. Further, it introduced a last-mile delivery pilot – Spark Delivery — in an attempt to expand its grocery delivery services across 100 metro areas in the United States.

Meanwhile, Target also offers free pick-up and delivery services along with two-day shipment facility to deliver enhanced shopping experience. Further, the company’s Shipt buyout is adding reinforcing its same day delivery services which is available in U.S. states like Montana, Maine and New York. Further, its Grand Junction acquisition continues to improve delivery services.

Growing initiatives by these retailers are likely to intensify competition.

Amazon’s Aggressive Stance

Nevertheless, Amazon’s aggressive stance will intensify the competition in the grocery retail space and disrupt the market further.

The company is aggressively pursuing the inauguration of a new chain of grocery stores across all the major cities of the United States including San Francisco, Seattle, Chicago, Washington D.C. and Philadelphia with the first one in Los Angeles. The stores will stock variety of items from different categories such as grocery, health and beauty products.

Further, Amazon is gaining steam to set up additional Whole Foods stores across more U.S. cities and suburbs in a bid to facilitate fast delivery services to more grocery shoppers.

Moreover, the company has adopted price cut policy in a bid to attract customers to Whole Foods stores. Starting from Apr 3, hundreds of products at Whole Foods are being sold at a lower price thus allowing the grocery shoppers to save up to 20% on average.

Additionally, it intends to take the number of Amazon Go stores to a record of 3,000 stores by 2021. We believe the company is well poised take advantage of the technical progress in the retail sector with the increasing number of Amazon Go stores and innovative technologies.

Currently, Amazon carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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