Amazon.com’s (NASDAQ:AMZN) grocery service AmazonFresh quietly released big news Monday when its updated company homepage illustrated that its same-day delivery business is expanding its limits, and is now available in Los Angeles. The move marks AmazonFresh’s first non-Seattle market as the service works to expand to 20 more markets before the end of the year.
LA residents can now test the new service before committing, as Amazon offers a free 90-day trial before charging customers a $299 fee for the next year. The steep charge will likely deter bargain shoppers, but the high cost also affords customers an Amazon Prime membership that comes with many benefits. The expense may also work to Amazon’s advantage as it keeps the service moderated, and decreases the chances of it expanding too rapidly at a rate that Amazon can not yet effectively manage.
AmazonFresh allows customers to place orders for groceries in the morning, and have them delivered to their door step on the same day. The service’s expansion reflects Amazon’s ability to overcome certain hurdles that accompany same-day delivery promises. Amazon has been testing the service for over five years, but it is still working through certain challenges such as how to properly handle perishable grocery inventory.
Just as Amazon is increasing its efforts to expand into the grocery business, other big-name retailers, such as Target Corp (NYSE:TGT) and Wal-Mart Stores (NYSE:WMT) are working to fortify theirs. Target is rolling out a new organic brand, Simply Balanced, and Wal-Mart has recently made a pledge to cut out the middlemen and buy its produce only from local farmers.