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Amazon Expands Grocery Delivery Service to 3 New Markets

Zacks Equity Research

Amazon.com Inc.’s AMZN online grocery delivery business, AmazonFresh, is likely to get a boost as it has expanded the service to three new cities — Houston, Minneapolis and Phoenix.

The service enables the residents of these 3 cities to order groceries online and get these delivered in two hours or less, thus saving both time and effort. In addition, shoppers can combine grocery orders with Amazon bestsellers such as Amazon devices, home & kitchen, toys, health and personal care, and electronics and get delivery within a couple of hours.

Amazon Prime members can avail the service at $14.99 a month.

In today’s fast-paced world, timely delivery holds immense significance. The expansion of AmazonFresh to new cities is likely to aid the company in attracting new customers to its platform, which in turn will boost Prime adoption rate.

Amazon.com, Inc. Price and Consensus


Amazon.com, Inc. Price and Consensus

Amazon.com, Inc. price-consensus-chart | Amazon.com, Inc. Quote

Strengthening Delivery Services

Amazon’s strong focus toward enhancement of delivery services remains a key growth catalyst. With the expansion, the AmazonFresh service is now available in 18 cities across the United States.

Apart from the latest initiative, the company recently introduced two-hour delivery service of natural and organic products such as meat and seafood, fresh produce and staples from Whole Foods Market to additional cities of the United States namely Lexington, Little Rock, Charlottesville, Asheville, Columbia, Manchester, Savannah, Naples and Mobile.

The move will enable Prime grocery shoppers at Whole Foods stores in the above-mentioned cities to avail the company’s fast delivery and pickup service via Prime Now.

Further, the company revealed that its free one-day shipping service, Prime Free One Day, now covers more than 10 million products under categories such as beauty and baby products, books, daily necessities and devices across the United States.

This is in sync with its plans to gradually substitute two-day delivery with one-day delivery service.

All these above-mentioned endeavors are expected to further bolster the company’s presence in the U.S. e-commerce and retail space.

Bottom Line

Though Amazon is not very optimistic about generating high margins from the grocery delivery service, it expects the latest expansion to broaden operational activities (shopping) to different categories from electronics to clothes and household essentials.

Zacks Rank & Stocks to Consider

Amazon currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Alphabet Inc. GOOGL, Itron, Inc. ITRI and Teradyne, Inc. TER, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth for Alphabet, Itron and Teradyne is currently projected at 17.5%, 25% and 11.4%, respectively.

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