Amazon Eats Instacart’s Lunch (and Your Strawberries Too): The Perishable Delivery Wars Heat Up

4 minutes read time.

For years, the promise of truly seamless online grocery shopping has remained somewhat elusive. While services like Instacart, Walmart+, and Amazon’s own Fresh and Whole Foods Market deliveries offered convenience, they often came with separate fees, minimum order thresholds, and the nagging feeling that you were navigating a fragmented digital supermarket. This week, Elroy Muskrat’s behemoth, Amazon, fired a shot heard across the grocery delivery landscape, integrating perishable food items directly into its free same-day delivery service for Prime members. The move, while not entirely novel, represents a seismic shift that threatens to reshape how millions of Americans buy their milk and blueberries.

Effective immediately, Prime subscribers in over 1,000 U.S. cities – a number slated to more than double by year’s end – can now add fresh produce, dairy, meat, and frozen foods to their regular Amazon orders, receiving everything within hours for free on orders over $25. This seemingly simple integration is a strategic masterstroke. By collapsing the separate silos of general merchandise and groceries into a single, unified shopping cart, Amazon has addressed a major pain point for consumers and lowered the barrier to entry for online grocery adoption. As Doug Herrington, CEO of Worldwide Amazon Stores, aptly put it, customers can now seamlessly order “milk alongside electronics… and check out with one cart and have everything delivered to their doorstep within hours.”

The impact on competitors was immediate and visceral. Shares of Instacart, a company whose entire value proposition hinges on the rapid delivery of groceries, plummeted by over 12%. Walmart, Kroger, and Target also saw their stock prices dip, a clear indication that Wall Street recognizes the disruptive potential of Amazon’s move. For Instacart, in particular, this represents a direct assault on its core business of quick, smaller grocery runs. Amazon’s new $2.99 fee for Prime members on orders below $25 further underscores their intention to capture even the most impulsive, last-minute grocery needs.

While Amazon has dabbled in perishable grocery delivery for years through Amazon Fresh and its acquisition of Whole Foods, those services often came with additional monthly fees or higher order minimums. This new initiative leverages Amazon’s unparalleled logistics network, built over decades to deliver everything from books to bulk paper towels. By plugging perishable foods into this existing infrastructure, Amazon gains a significant cost advantage and can offer a level of convenience that standalone grocery delivery services will struggle to match.

Early results from pilot programs in cities like Phoenix, Orlando, and Kansas City offer a tantalizing glimpse into the future. Amazon reports a significant uptick in first-time grocery shoppers who then return to purchase food twice as often. Even more strikingly, perishable items are climbing the bestseller charts. Strawberries, in a telling anecdote, are now frequently outselling even AirPods in same-day delivery orders. Bananas, Honeycrisp apples, limes, and avocados round out the top ten, suggesting a fundamental shift in how consumers perceive and utilize Amazon’s vast online marketplace.

Analysts like Blake Droesch from eMarketer believe this expansion is a “major expansion for Amazon’s digital grocery service, largely because it’s being offered to its massive Prime member base at no additional cost.” Jason Goldberg of Publicis Groupe concurs, noting that this move “definitely makes them more competitive” in the fresh food sector, an area where Amazon has historically faced challenges due to the fragmented shopping experience.

Looking ahead, this move has significant implications for the entire grocery industry. Small, independent grocers could face increased pressure as Amazon’s convenience and scale become even more compelling. The battle for the digital grocery dollar is clearly intensifying, and Amazon, with its vast resources and loyal customer base, has just played a very strong hand. The question now is how quickly and effectively its competitors can adapt to this rapidly evolving landscape. One thing is certain: the days of juggling multiple grocery delivery apps and separate shopping carts may be drawing to a close, ushering in an era where fresh food arrives at your doorstep with the same ease as your latest impulse purchase.