Amazon’s Big Advantage in the Online Grocery War with Walmart

Prime Now

With the impending deal between Jet.com and Walmart, it makes sense to have a look again at what exactly Amazon Prime is doing for Amazon (and, as a consequence, to its competitors).

Fortune from earlier this year:

A survey released on Tuesday by Wall Street firm Cowen & Co found that one quarter of Prime members used Prime Now in January 2016, with many of those people repeat customers. Cowen’s survey of 1,250 people found that 70% of respondents used Prime Now several times a month.

Prime Now is still only available in 24 major U.S. markets and costs about $8 for one-hour delivery service. It is free for Prime members ordering from an assortment of 10,000 different items if delivery is after two-hours. (…)

“We view Prime Now as one of the pathways Amazon is utilizing to gain share in the $1 trillion U.S. grocery market,” Cowen analysts wrote in a research note. (…)

According to Cowen’s survey of 2,500 customers in December, members of Prime—a $99 annual subscription service that offers, among other benefits, free two-day shipping—had an average household income of $69,300. That’s well above the income of Amazon shoppers in general, some 24.8% higher than Walmart shoppers’ average income, and 4% above Target’s. Such customers are likelier to be willing to spend more for quick delivery.

Prime Now is now advertised as “Ultra-fast FREE Delivery” (for 2-hour delivery) exclusively for Amazon Prime Members.

One can only hope for Walmart’s shareholders that Marc Lore and Walmart have an answer to Amazon Prime ready. Right now, neither Walmart nor Jet.com does. This fact leads to the biggest question regarding the rumored $3 billion deal which is as much about Amazon’s U.S. online dominance as anything else.

More on this topic:

One comment

  1. […] Amazon’s Big Advantage in the Online Grocery War with Walmart […]

    Like

%d bloggers like this: