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Amazon’s $20-Cheaper NYC Grocery Run

How aggressive is Amazon’s pricing in its Amazon Fresh grocery delivery business? Aggressive enough that it beat Instacart, Peapod and Fresh Direct by more than $20 for a 30-item order in New York City in a Nomura Securities test, Bloomberg News reported on Wednesday (April 16).

According to the Nomura report, New York-based analysts ordered 30 items, including green seedless grapes, Eggo whole-wheat waffles and a two-liter bottle of Coca-Cola — from the four online grocery delivery services.

The order cost $122.03 from Amazon Fresh, including a $5 tip. The Instacart order, which was placed through its grocer partner Fairway, cost $142.86, or $20.83 cents more, a 17 percent premium. Fresh Direct was the most expensive, at $158.74, or 30 percent more than Amazon. (Bloomberg didn’t mention the Peapod pricing, which came in somewhere between Instacart and Fresh Direct.)

“We believe that price, convenience, selection, and service will dictate who wins, but believe Amazon is currently very well positioned,” analyst Robert Drbul wrote in the Nomura report.

Peapod currently has 5.8 percent of the $10.9 billion U.S. online grocery market, followed by Fresh Direct at 4.8 percent and Amazon 4.7 percent, according to a December report by IbisWorld.

A Peapod spokeswoman pointed out to Bloomberg News that its service does not charge a membership fee. Amazon Fresh is only available to Amazon Prime members, who pay $99 a year, but there’s no indication the Nomura study tried to factor that into its results.

Amazon is investing billions in new warehouses for same-day local delivery, and that may pose serious problems for its competitors, which typically partner with grocery chains to supply the actual products. TechCrunch reported last week that Instacart, which has already handed over product pricing for its grocery deliveries to its grocer partners, is now in the process of outsourcing the physical delivery, too. That could make it impossible for Instacart to offer competitive pricing.

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