Online Retail Giant’s Grocery Delivery Service AmazonFresh May Launch in San Francisco Next Week
Another online grocery delivery service seems set to launch in San Francisco, and it’s a big one: AmazonFresh.
All signs are pointing to Amazon publicly launching the same- and next-day delivery service in the very near future, based on information that AllThingsD received from a source, as well as several AmazonFresh truck sightings in recent days in San Francisco, and a recent job posting.
A source said the launch is expected to be announced on Tuesday, Dec. 10, which would come six months to the day after Amazon announced that it had expanded the service for the first time out of Seattle and into Los Angeles.
Asked for comment on next Tuesday’s potential launch date, Amazon spokesman Scott Stanzel said the company had “nothing to share at this time.”
Here’s what we can share, though: The service lets shoppers go online and order from an assortment of groceries, including milk, fresh produce and dry goods, and then get delivery on the same day or next day. In Los Angeles, Amazon offers grocery delivery under a program it is calling PrimeFresh, which combines access to AmazonFresh with the normal benefits of the Amazon Prime program that offers free two-day shipping on products of all kinds. The PrimeFresh service costs $299 a year.
In a recent interview with “60 Minutes,” Amazon CEO and founder Jeff Bezos explained the reason that it took so long for the company to launch the service outside of Seattle.
“How to make it make financial sense,” Bezos said. “What’s not to love? You order the groceries online, and we deliver them to your door. But that’s very expensive.”
But, like several other bets it makes, Amazon doesn’t necessarily need to make money on the grocery business, but just not to lose money. As I wrote in July: “Many view grocery delivery for Amazon as merely a means to an end through which it is ramping up demand for something that people buy weekly to justify the cost of same-day delivery for other goods bought less frequently, but with much higher prices and profit margins.”
To accomplish this, Amazon has been building warehouses — which it calls “fulfillment centers” — closer to major metropolitan areas, such as a one-year-old facility with refrigeration in San Bernardino, Calif.
“If we can make this model work, it would be great, because it extends the range of products we can sell,” Bezos said in the television interview.
In San Francisco, Amazon will face competition from major retailers such as Safeway, Walmart, Google Shopping Express and Instacart, a Sequoia Capital-backed startup that recently expanded to Chicago, and was founded by a former Amazon employee.