In a rare instance where Amazon admits it extended itself too far, the e-Commerce giant is scaling back its grocery delivery business, AmazonFresh, from select zip codes in at least nine states.
The retrenchment seems surprising in the wake of Amazon’s $13.7 billion Whole Foods acquisition, but it delivers a major reality check to retailers: grocery delivery is difficult, even for those with the most efficient delivery infrastructure.
Online grocery is anticipated to grab as much as 20% of the U.S. market by 2025, but the continued headwinds to the sector’s growth may be a sign that such predictions are overly optimistic.
These services aren’t cheap. AmazonFresh customers currently pay $14.95 per month on top of the $99 Prime membership fee, while annual subscriptions to FreshDirect and Instacart are $129 and $149 respectively. Home delivery fees at FreshDirect range from $6 to $8 per delivery, with $30 order minimums, while these fees at Instacart are $4 to $6 for two-hour deliveries and $6 to $8…