Amazon Expands Grocery Delivery Service, To Offer $299 ‘Prime Fresh’ Subscriptions

amazonfreshAfter several years of testing grocery delivery service in Seattle, the online retailer has expanded its AmazonFresh program to Los Angeles. Customers in the L.A. area will also be able to try out Amazon’s new “Prime Fresh” plan that offers same-day or overnight service of groceries and other items.

According to Reuters, current Prime members in parts of L.A. will have trial access to AmazonFresh deliveries for 90 days with no delivery charges. Following the trial, they will be upgraded to the $299/year Prime Fresh membership, that promises the speedy delivery on orders of groceries and qualifying items that total more than $35.

Amazon’s goal is to compete with Walmart, which has been looking at options — from in-store lockers to having vetted customers make deliveries — for reaching online customers. It would also put Amazon in competition with existing services like Peapod and FreshDirect, which generally tack on delivery fees and can have wait times of a few days.

The company is reportedly set to bring AmazonFresh to San Francisco later this year, putting it face-to-face with Google’s recently launched same-day delivery program. While Google is catering to customers that are willing to pay a premium to get things right away, it appears that Amazon is looking to leverage its existing Prime customer base, who reportedly spend twice as much as non-Prime customers, and get them thinking about Amazon as a viable source for groceries too. However, AmazonFresh does have an array of local businesses and restaurants whose items are sold through the service.

“The $299 price point is intriguing and could help to not only drive greater shopping frequency and increase the amount spend on Amazon per member, but also shopping across a wider range of Amazon departments,” one analyst tells Reuters.

Insiders say Amazon’s grocery service could succeed in the notoriously thin-margin market of grocery deliveries by making that money up on the myriad non-grocery items customers will be able to buy.

AmazonFresh could be in nearly two dozen metro areas by the end of 2014, reports Reuters.