Amazon axes $14.99 Amazon Fresh fee, making grocery delivery free for Prime members to boost use

Amazon is turning up the heat once again in the world of groceries, and specifically grocery delivery, to make its service more enticing in face of competition from Walmart, as well as a host of delivery companies like Postmates. Today, the company announced that it would make Amazon Fresh — the fresh food delivery service it now offers in some 2,000 cities in the US and elsewhere — free to use for Prime members, removing the $14.99/month fee that it was charging for the service up to now.

Alongside free delivery, Amazon is giving users one and two-hour delivery options for quicker turnarounds, and it’s making users’ local Whole Foods inventory available online and through the Amazon app.

Prime members who were already using Amazon’s grocery delivery services — either for Amazon’s own-branded service or to get Amazon-owned Whole Foods shopping delivered — will continue to get these, now free. Those who might be interested in trying this out for the first time will have to sign up here and wait for an invite. (“Given the rapid growth of grocery delivery we expect this will be a popular benefit,” Amazon explained about the waitlist.)

“Prime members love the convenience of free grocery delivery on Amazon, which is why we’ve made Amazon Fresh a free benefit of Prime, saving customers $14.99 per month,” said Stephenie Landry, VP of Grocery Delivery, in a statement. “Grocery delivery is one of the fastest growing businesses at Amazon, and we think this will be one of the most-loved Prime benefits.”

Making Amazon Fresh free is the latest price tinkering (and reduction) that Amazon has made to drive more usage of the service. The $14.99 fee was introduced back in 2016, itself a reduction on a $299/year fee that Amazon previously charged Amazon Fresh customers. Before that, Amazon charged a $99/year subscription plus separate delivery fees to use the service.

It’s not clear how many customers are already using Amazon Fresh. Analysts earlier this year estimated that while the company was still seeing its grocery service growing, that growth was slowing. The company has made fast and free delivery one of the major cornerstones of its business, and so it makes sense that it would invest in ways of trying to boost that service in the a bigger economy of scale play to bring in more users buying more groceries, making up the margins in the latter to offset potential losses in the former.

But the move to make it “free” — free, that is, for those who are already paying $12.99/month or $119/year for Amazon Prime — is a classic Amazon move not just to boost its own usage numbers of the service.

The company is facing persistent competition from a number of other companies also providing online grocery shopping and delivery. In the UK, just about every large grocery chain offers this service directly (or through another non-Amazon partner). In the US, Walmart announced last month that it would be expanding its $98/year Delivery Unlimited service, which up until today would have been a cheaper deal than Amazon’s. Both Postmates and Doordash are among the delivery hopefuls who also have ambitions to make a dent in this area.