Amazon unveils new unlimited grocery delivery subscription

Amazon (AMZN) has announced that it will launch a new unlimited grocery delivery subscription for Prime members for those living in 3,500 eligible cities and towns. The program will allow users to get free deliveries for grocery orders totaling more than $35 across its subsidiaries, including Amazon Fresh and Whole Foods. It costs $9.99 per month for Prime members and $4.99 for those with a registered EBT card who do not have a Prime membership.

Yahoo Finance's Madison Mills and Seana Smith break down the latest announcement from the online sales giant.

For more expert insight and the latest market action, click here to watch this full episode.

This post was written by Nicholas Jacobino

Video Transcript

SEANA SMITH: Right, well, Amazon launching an unlimited grocery delivery subscription for Prime members. Customers living in 1 of the 3,500 eligible cities and towns will be able to get free deliveries for grocery orders over $35. This is across Amazon Fresh, across Whole Foods, and some other specialty retailers. Now, this comes after Amazon removed its, quote, "Just Walk Out" technology from its stores last week. So a bit of an update there.

We're looking at gains for Amazon just about 3/10 of a percent. It's also-- it's worth taking a look at the reaction that we're seeing in Instacart this morning because, again, really Amazon coming in as a direct competitor to Instacart and some of the movement that we have seen there. So this could potentially pressure their business down the line.

But when you take into account what this is offering here, clearly, this is Amazon capitalizing on, obviously, the fact that it owns Whole Foods here, capitalizing on technology that they already have put in place. They obviously know the subscription business extremely well so they're now extending that and expanding what they had previously offered when it comes to groceries. And no surprise there right now of Instacart up on the screen with shares off just about 7 and 1/2%.

MADISON MILLS: Yeah, and it's really interesting, because if you look at some of the analyst reaction that we're already getting, they're saying that given Amazon's limited success with grocery deliveries to date, they don't expect that huge of an impact on competitor offerings like Instacart at this point. Although, quote, "This ultimately depends on Amazon's ambitions in the category." So interesting to see that there's not that huge analyst reaction.

However, I do think-- I mean, Seana, if we want to use me as the test case here, I turned to you and said, oh, well, I'm switching to Amazon just because for consumers who already have so much brand loyalty, they're used to those deliveries. And some of the perks here, Amazon has the capital on hand to offer things like free one-hour delivery, unique offerings to Amazon Prime current users, and also to EBT users as well. So that could be an indication that for Instacart, they're going to have to beef up some of those offerings to compete.

SEANA SMITH: Yeah, and you could also bring up Walmart Plus, the program that Walmart has there, also, what Target has. They have a free grocery delivery plan that costs about $99 a year. So not exactly free because you're paying $99 a year.

But again, this could pressure some of the other offerings that are out there as Amazon, the behemoth within the space-- one of the behemoths within the space, obviously, expanding their offerings there and you would think will likely grab some of that market share. You being a test case, one of those people. Maybe I will too because you go to Amazon, you get used to using Amazon for so many things. So the fact that it's there within the ecosystem on the platform makes it very easy for the user base that they already have baked in.

MADISON MILLS: Yeah, Absolutely.