Amazon Prime members in the US will soon be able to get free grocery delivery orders from Amazon Fresh when they spend over $100 on the site, Insider has learned. The previous threshold for free deliveries was $150, which started in February 2023.
Amazon plans to make the new fee structure effective this week, according to an internal document, obtained by Insider. Currently, orders between $100 and $150 incur an $3.95 additional fee. All other delivery fees will remain the same, including $6.95 for orders of $50 to $100, and $9.95 for deliveries under $50 for Prime members, the document said.
"We're always listening to customer feedback and looking for ways to make shopping for groceries easier, faster, and more affordable. As part of that, we continuously test our delivery models to see where we can make adjustments, and recently received positive feedback from customers when we piloted this change in select cities," the document said.
In an email to Insider, Claire Peters, Amazon's worldwide VP of Amazon Fresh, said the change will go into effect Thursday afternoon.
"Prime membership continues to be an enormous value and this change will save members even more on grocery delivery fees, while also allowing them to enjoy added savings, convenience, and entertainment with Prime," Peters said in a statement.
The move signals Amazon's continued ambitions in the grocery space, even though it's seen very little growth. Despite having acquired Whole Foods for $13.7 billion in 2017, Amazon has struggled to expand its grocery business. In 2021, for example, Amazon commanded just 1.2% of the US grocery market, falling way behind Walmart's 25% or Kroger's 8% share, according to Euromonitor.
It's also a swift change from the new fee structure Amazon started imposing in February, indicating the company may have found better cost efficiencies. At the time, Amazon said the new fees were necessary to keep prices low in its online and physical grocery stores. The internal document encourages Amazon employees to stick to the same talking point if a customer asks about the delivery fees.
"The service fee allows us to keep in-store prices low, while also allowing us to continue to offer a consistent, high quality delivery experience," it said.
Amazon offers grocery delivery to Prime members in more than 3,500 cities and towns across the U.S. Non-Prime members in a dozen metro areas, including Austin, Boston, and San Diego, can also receive grocery deliveries.
Amazon is considering a separate, standalone grocery subscription service for Prime members, as Insider previously reported. During its most recent earnings call, Amazon's CFO Brian Olsavsky said, "Our grocery business continues to grow."
The internal document about the new Fresh fee structure reflects Amazon's willingness to keep investing in the Fresh grocery business.
"Our goal is to build a best-in-class grocery shopping experience — whether shopping in-store or online — where Amazon is the first choice for selection, value, and convenience. It's still Day 1, and we're excited about the future of grocery at Amazon," it said.
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