AmazonFresh launches in San Francisco but faces stiff competition

Amazon at last launched its grocery delivery service in San Francisco on Wednesday, more than six months after reports began swirling that the e-commerce giant was plotting a major AmazonFresh roll out that would include the Bay Area.

The company has been testing AmazonFresh in its hometown of Seattle for at least five years, delivering fresh produce to customers’ homes using its own warehouses and truck fleets. Amazon recently opened a warehouse in Tracy to facilitate its California distribution.

Amazon Fresh offers same-day delivery for groceries that can be purchased through Amazon.com, as well as local bakeries, gourmet food stores and restaurants, such as the San Francisco Fish Company. The service is available only in certain San Francisco zip codes. An upgraded Amazon Prime membership will get you free grocery delivery for 30 days; after the free trial, the Prime Fresh service costs $299 per year. Customers must order before 10 a.m. to get their groceries the same day.

There were early signs last week that Amazon, which has been silent about its grocery delivery roll out and did not respond to many requests from the Mercury News about its plans, was ready to launch the service in San Francisco. AllThingsD first reported the tell-tale signs of Amazon Fresh trucks on Bay Area roads, and the Wall Street Journal reported a job posting for an AmazonFresh manager in the Tracy warehouse.

But the company faces stiff Bay Area competitors, which launched and quickly grew as Amazon dragged out its testing in Seattle. Several startups have tackled the delivery space, and in September Google started a same-day delivery service that includes groceries. The next few months may see an all-out grocery delivery battle between startups, tech companies and big-box retailers.

Perhaps no startup has been more successful in grocery delivery than Instacart. Founded by a former Amazon engineer, Apoorva Mehta, Instacart provides same-day grocery delivery in San Francisco and most of the Bay Area, using personal shoppers who use their own vehicles to pick up grocery orders from local supermarkets. Through the Instacart website or app, customers can order groceries from Whole Foods, Costco, Safeway and Berkeley Bowl. Most orders are delivered within an hour and cost $3.99, and customers can order late into the evening and still get same-day delivery. The company also rolled out a subscription service similar to Amazon Prime.

Because Instacart doesn’t use trucks or warehouses — and right now has no formal agreement with the grocery stores it shops at — its overhead is minimal, and the company has grown quickly, adding service in Chicago in September. On Wednesday, Instacart made the well-timed announcement that it had launched in Boston.

Walmart, too, responded to the AmazonFresh launch on Wednesday by sending out a message to some media reminding them that the big-box retailer also does grocery delivery.

“There’s some speculation about online grocery delivery here in the Bay Area, and I wanted to be sure you had the latest regarding the service we’ve been testing locally since 2011,” spokesman Ravi Jariwala wrote in an email.

Walmart grocery delivery is available from San Francisco to San Jose, including most cities along the Peninsula, and include fresh produce, meat and seafood. Orders must be placed by 8 a.m. and are delivered in a two- or four-hour window up to 11 p.m. The cost is $3 to $10 for most orders, with the first order free, and a $30 minimum purchase.

 

Images fresh.amazon.com

Heather Somerville Heather Somerville (222 Posts)

Heather Somerville is a business reporter covering venture capital and startups for the Bay Area News Group.