Amazon Fresh sharpens appeal to price-sensitive grocery shoppers

The news: Amazon Fresh is wooing cost-conscious grocery shoppers with Prime-exclusive discounts on over 3,000 grocery products, per a company blog post.

• The retailer also launched its latest private label, Amazon Saver, which offers “no frills” grocery essentials like cookies and canned fruit priced mostly under $5 both in-store and online.
• On top of that, Amazon revamped its grocery storefront to make it easier for shoppers to reorder frequently purchased items, make recurring reservations, and view products by category or themes such as can’t-miss deals.

How we got here: Amazon’s emphasis on affordability arrives as price becomes shoppers’ overriding concern when grocery shopping—a trend that’s allowed competitor Walmart to grow its share of the grocery market and capture spending from a wider swath of consumers.

• Tethering discounts to Prime membership is also a savvy way to enhance the value of the offering and give price-sensitive customers another reason to sign up—although shoppers looking to receive the same free delivery benefits as Walmart+ will have to pay an extra $9.99 monthly or $99.99 a year for Amazon’s grocery add-on.
• The hope is that consumers will get used to the convenience and savings offered by Amazon and turn to the retailer to fulfill more of their needs—a reasonable assumption given that long-term growth in the digital grocery space will come from existing buyers spending more of their grocery budgets online.

Our take: While Amazon Fresh is making a significant push to appeal to shoppers’ price sensitivities, its limited store footprint puts it at a disadvantage compared with Walmart and pure-play grocers like Kroger and Albertsons, which can use their vast store and warehouse networks to offer speedy delivery as well as fulfillment options like click-and-collect.