Further encroaching on one of hyperlocal’s oldest verticals, Amazon sent shivers down the spines of grocers in San Francisco and Atlanta this week, announcing it would begin delivering Whole Foods orders for free to Prime members in those cities.
The move comes just a couple of weeks after Amazon announced that Prime members would receive 5% back on purchases at Whole Foods, the organic grocery giant it purchased last year in a landmark $13 billion deal.
By far Amazon’s largest acquisition, the Whole Foods purchase confirmed what many industry analysts had previously predicted — that Amazon would leverage its massive power in the retail market to directly compete with the brick-and-mortar retailers its e-commerce presence had already challenged.
In the new arrangement, orders of over $35 will be eligible for delivery within two hours. Prime members in San Francisco and Atlanta can pay $7.99 to receive their orders within an hour.
The deal is potentially damaging for grocery delivery startup Instacart, which is worth over $3 billion itself and has partnered with Whole Foods for years.
For local grocers without the bandwidth to deliver, Amazon’s rapidly growing grocery ambitions will spark apprehension and perhaps a desire to collaborate with other technology companies that can help them harness a bit of the technological efficiency underpinning the e-commerce company’s own dominance.