Amazon.com Inc. (AMZN - Free Report) has expanded its delivery service of natural and organic products from Whole Foods Market to other new cities, as well as additional areas of New York City and Seattle through Prime Now.
Ann Arbor, Detroit, Jacksonville, Madison, Milwaukee, Omaha, Orlando, St. Louis, Tampa and Tulsa are the latest additions receiving this service, thus, taking the total to 48 cities.
The service will likely offer products like fresh produce, high-quality meat and seafood, everyday staples, and other locally-sourced items. This is in sync with the company’s continued focus toward enriching shopping experience for customers.
In addition, Amazon has expanded its grocery pickup service from Whole Foods Market to three new cities, including Ft. Worth, Kennesaw and Richmond. This service enables the customers to shop Whole Foods’ selected items via Prime Now and pick up these groceries within 30 minutes by parking their car in reserved pickup spot.
Coming to the price performance, Amazon has outperformed the industry it belongs to on a 12-month basis. The company’s shares have surged 107.8% compared with the industry’s growth of 42.6%.
Growth in U.S. Grocery Retail Market
Per a report from IGD, the U.S. grocery retail market is expected to reach $1.7 trillion by 2022, at a CAGR of 3.6% between 2017 and 2022.
Additionally, the report suggests that online grocery shopping is anticipated to hit $20 billion by 2022, by registering 18.1% growth during the period, making it the fastest growing segment.
The acquisition of Whole Foods Market last year helped Amazon fortify its presence in the grocery retail market. Moreover, Amazon Prime has played a significant role in shaping the company’s growth trajectory in this market with its loyalty programs and customer friendly offers.
We note that the ongoing expansion of the company’s quick delivery service from Whole Foods stores, along with additional discounts and other benefits across the United States, is likely to benefit its market position, thereby boosting the subscriber base of Prime.
Amazon is strengthening its competitive position against the likes of Walmart (WMT - Free Report) , Target (TGT - Free Report) and Kroger (KR - Free Report) , which are the major players in the U.S. grocery market.
Walmart acquired Parcel and extended partnership with Deliv to support its same-day delivery initiative. Recently, it introduced a last-mile delivery pilot —Spark Delivery — in an attempt to expand the company’s grocery delivery services across 100 metro areas in the United States by 2018.
Target has also acquired Shipt to expand its same-day delivery services. Additionally, it is planning to roll out the service in California, starting from Bay Area. The company’s buyout of Grand Junction has improved its delivery capabilities.
Further, Kroger recently acquired Ocado, which will likely intensify competition in the U.S. grocery market.
Meanwhile, Amazon has been making efforts to bump up its delivery system. From the span of a day to two hours, two hours to 15 minutes and 15 minutes to two minutes, Amazon has been cutting down on its delivery time for Prime members.
This apart, Amazon lately ordered 20,000 Mercedes-Benz vans to support its delivery service program “last-mile”, which is set to pick up deliveries from 75 supplier centers around the nation.
Hence, Amazon with Whole Foods, Prime Benefits and strengthening delivery services, is anticipated to keep gaining momentum in the market.
Currently, Amazon carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
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