Can Amazon’s Prime Pantry Compete with Costco and Wal-Mart?

Online retail giant Amazon.com Inc. (NASDAQ:AMZN) launched another new service this week, and this one targets the likes of competitors Costco (NASDAQ:COST) and Wal-Mart (NYSE:WMT). The service, which Amazon is branding as Prime Pantry, is a delivery service that allows customers to fill a box of of non-perishable groceries, which is then shipped to customers at a flat rate, according to Entrepreneur.

The move is likely an effort to compete with existing discount giants, where thrifty customers save money by buying staples in bulk. So how does Amazon’s new service differ, aside from the obvious direct-to-your-front-door factor?

Unlike Costco, which provides customers with monster, bulk-size versions of consumers’ everyday staples — such as cereal, paper towels, canned soup, pet food, or detergent — Amazon will offer “everyday sizes” of those same products and provide customers with a similar discount, since they are buying the items together and having them shipped in bulk. The service’s tagline even pokes fun at this contrast, proclaiming “Everyday essentials in everyday sizes.”

Customers can fill a 4-cubic-foot box with up to 45 pounds of items, according to GeekWire, and have it shipped right to their home for a flat rate of $5.99, plus the cost of the items in the box (obviously).

But Prime Pantry might not provide quite the service excellence that Amazon Prime members are otherwise used to, GeekWire cautions. Prime Pantry orders are expected to arrive in one to four days — slower, generally, than the company’s standard two-day shipping for Prime members.

Additionally, that flat rate shipping fee comes on top of customers’ existing annual Prime membership fees, which have gone up recently by $20. A yearly Prime membership used to be $79 and is now $99, according to the company’s website and GeekWire. Therefore, the expense of the service may be a tough sell for Costco or Walmart customers who are more bargain savvy; the company is clearly marketing the service to those consumers for whom convenience overrides the additional fee and slightly higher cost than competitors.

The new service is part of a larger effort by Amazon to break into the market for household products and groceries. Earlier this month, the company launched Amazon Dash, a barcode scanner that allows customers to automatically add scanned products to their online Amazon shopping cart. The scanner was targeted at the company’s already existing Amazon Fresh customers in San Francisco and Los Angeles, but it seems a natural extension of the Prime Pantry service, GeekWire reports.

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