Although Amazon’s announcement that it was retiring the app and website of its Prime Now ultrafast delivery service and incorporating it into the main Amazon site was aimed at its millions of members, the strategic shift was also a competitive warning to rivals like Walmart and Target who have grown their digital grocery sales throughout the pandemic.
“To make this [fast delivery] experience even more seamless for customers, we are moving the experience from a separate Prime Now app onto the Amazon app and website so customers can shop all Amazon has to offer from one convenient location,” Amazon Vice President of Grocery Stephenie Landry wrote in a blog post, which noted Prime Now emergence as “a customer favorite” for everyday essentials, gifts, toys, groceries and more.
First launched in 2014 and available in a handful of major cities, Prime Now was initially designed to make same-day delivery of essential items available for Prime members. The service has since grown and expanded, and is now available to consumers in 5,000 places worldwide. The relocation to the main app is of a piece with Amazon’s other recent moves to streamline its series for consumers — earlier this year Amazon pulled the plug on its Prime Pantry service, again relocating those goods to the main Amazon site and consolidating its Amazon Go and Amazon Fresh grocery brands into a single offering.
Consolidation, it seems, is the theme in Amazon’s grocery narrative of late — consolidation in a context where the grocery battle is increasingly shifting to dominance of delivery. Rivals Walmart and Target in their earnings releases this week both confirmed dramatically scaled-up efforts at taking on delivery as the big box stores look to close the gap with Amazon.
Walmart U.S. CEO John Furner noted in the firm’s earnings call on Tuesday (May 18) that the chain has been training its first company-branded “last-mile” delivery vans since January near its Aransas home base. The drivers work for Walmart, which also employs its semi-truck drivers. CEO Doug McMillon meanwhile talked up Walmart’s emerging paradigm of customer choice — and making it easily possible for consumers to get what they want, how they want and when they want.
“We’ll likely have more uncertainty than a normal year, but we like our position,” McMillion told analysts and investors on the company’s earnings call, noting that stores were getting stronger and eCommerce was expanding. “Customers will decide how and when they want to shop and they’ll find us ready, whether they want to shop in store, pick up an order or have it delivered.”
Target, meanwhile, unveiled a host of digital investment and improvement as it announced earnings this week, talking up its host of independent drivers from Shipt, which it bought in 2017 for $550 million. Target also announced it has started testing package delivery from a new sorting center in its hometown of Minneapolis.
“Just as we saw our guests use our same-day services during the pandemic, using pick up and drive up and ship, we expect those services to be very sticky over time, and certainly we’ve ensured the awareness and the use of those same-day services by two, three, if not four years,” said Target COO John Mulligan during the earnings call. “And I think we’re going to continue to see our guests turn to Shipt and drive up and pick up.”
Everybody, it seems, wants to rule the delivery world. Who will end up winning the race?
The race, of course, can have more than one winner, as it is unlikely that we will do all of our shopping at the same store, despite Amazon and big box retailers’ best efforts over the last three decades to persuade us otherwise. But as Karen Webster has pointed out in several commentaries over the last year, Amazon retains the edge. While Walmart and Target are still experimenting with last-mile delivery, Amazon already has a network of drivers/micro business owners who deliver for Whole Foods today ready to leap online for the expanded edition of Prime Now. And evolution, Webster notes, that has been ongoing and rather aggressive for some time.
“Over the years, Amazon has evolved from an online store to an online marketplace that brings third-party sellers of traditional retail goods and potential buyers together on the Amazon platform to become what we call a dynamo: a many-armed matchmaker whose tentacles spread far and wide, adding streaming content, prescriptions, connected devices, wearables that connect to healthcare ecosystems, and connections to physical stores with Whole Foods, Amazon Go, 4-Star Stores and Amazon Books,” Webster writes.
Amazon, Webster noted, has built an incredibly powerful foundation for a super-app, and while Walmart in particularly has made moves to compete on this front, the advantage in the race, she said, remains with the online giant that is growing up fast, and consolidating its strength as the competition is stepping up its game.