Amazon.com Inc said on Tuesday it would make its grocery delivery service free for Prime members in the United States and integrate all orders for groceries into one portal.
The portal will have one- and two-hour delivery windows and include grocery delivery from Amazon Fresh and Whole Foods Market, the company said.
'Game Changer'
"I think that this of going to be a game changer, and it will grow into one of the most loved benefits of Prime," said Stephenie Landry, vice-president of grocery delivery.
Amazon said in 2017 it was ending its Fresh grocery delivery service for select areas. Landry, however, said the business is very much growing and has expanded this year to areas like Nashville, Orlando and Las Vegas.
Users would still have an option to shop groceries via other portals such as Prime Now, Amazon said.
The move is yet another salvo in the continuing delivery "arms race" that is enveloping retail, Charlie O'Shea of Moody's said.
Amazon has been cutting delivery times to one day for its Prime loyalty members, a way to outmanoeuvre rivals such as Walmart Inc that have marketed two-day shipping without subscription fees.
Costs for Amazon's one-day delivery will nearly double to $1.5 billion during the holiday quarter from the second quarter, chief financial officer Brian Olsavsky said last week.
'Long-Term Benefit'
"This new delivery effort is yet another example of Amazon's willingness to suffer short-term for the potential for long-term benefit," O'Shea added.
Shares of grocer Kroger Co were down 2.3% while those of Walmart were down about 1% in late morning trade.
Amazon ended its US restaurant food delivery service in June, giving in to growing competition from GrubHub Inc, DoorDash, and Uber Technologies' Uber Eats services.
Separately, food delivery company GrubHub forecasted slowing revenue growth for the fourth quarter on Monday, citing competition, sending its shares down 41%.
"I think they (Amazon) are seeing the same thing we are and that there is weakness in the private markets. There is a push for profitability. I think some of these companies are finally going to be held accountable for a lot of their investments," GrubHub's chief executive officer Matt Maloney said in a post earnings call with analysts on Tuesday.
