Leaked memo shows Amazon will make Fresh grocery deliveries for Prime members a lot cheaper again

• Amazon will make Fresh grocery deliveries free for US Prime members who spend over $100.
• Currently, US Prime members have to spend over $150 to get free Fresh grocery deliveries.
• The change signals Amazon’s continued ambitions in the grocery space.

Insider has learned that Amazon Prime members in the United States will soon be able to get free grocery delivery orders from Amazon Fresh when they spend more than $100 on the site. The previous free delivery threshold was $150, which began in February 2023.

According to an internal document obtained by Insider, Amazon intends to implement the new fee structure this week. Orders between $100 and $150 currently incur a $3.95 surcharge. According to the document, 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.

“We are constantly listening to customer feedback and looking for ways to make grocery shopping easier, faster, and more affordable.” As part of that, we constantly test our delivery models to see where we can make changes, and we recently received positive feedback from customers when we piloted this change in select cities,” according to the document.

Claire Peters, Amazon’s global VP of Amazon Fresh, told Insider that the change will take 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 press release.

The move indicates Amazon’s continued ambitions in the grocery space, despite the fact that it has seen very little growth. Despite paying $13.7 billion for Whole Foods in 2017, Amazon has struggled to expand its grocery business. According to Euromonitor, Amazon will control only 1.2% of the US grocery market in 2021, trailing Walmart’s 25% and Kroger’s 8%.

It’s also a quick change from the new fee structure Amazon implemented in February, implying the company may have discovered better cost efficiencies. Amazon stated at the time that the new fees were required to keep prices low in its online and physical grocery stores. The internal document encourages Amazon employees to use the same talking point whenever a customer inquires about 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,” the company said.

Amazon Prime members can get grocery delivery in over 3,500 cities and towns across the United States. Non-Prime members can also get grocery deliveries in a dozen cities, including Austin, Boston, and San Diego.

As previously reported by Insider, Amazon is considering a separate, standalone grocery subscription service for Prime members. Amazon’s CFO Brian Olsavsky stated during the company’s most recent earnings call, “Our grocery business continues to grow.”

Amazon’s willingness to continue investing in the Fresh grocery business is reflected in the internal document about the new Fresh fee structure.

“Our vision is to create a best-in-class grocery shopping experience — whether in-store or online — in which Amazon is the first choice for selection, value, and convenience.” “It’s still Day 1, and we’re excited about Amazon’s future of grocery,” the company said.