Why Amazon’s grocery shoppers have to spend more for free delivery

A major perk for Amazon Prime members is losing its sheen.Read more……

A major perk for Amazon Prime members is losing its sheen.

Starting Feb. 28, Prime shoppers must buy at least $150 in Amazon Fresh groceries to qualify for free shipping. For all two-hour delivery orders that don’t meet this new minimum threshold, a fee will be added to the bill, according to the Amazon Fresh website.

“Customers in some areas with delivery time flexibility of up to six hours will receive a reduction in fees,” Amazonn clarified. “One-hour grocery pickup at Amazon Fresh stores will continue to be free for Prime members.”

Previously, Prime members received free delivery on any orders over $35 or $50, depending on their location.

Is Amazon Prime still value for money?

The introduction of a service fee is irking Prime users, who have already had to fork out more money for the subscription program after Amazon hiked the price from $119 to $139 last year. Starting in 2021, orders from Whole Foods—which Amazon acquired in 2017—also had a nearly $10 fee tacked on.

In an email to customers informing them of the new threshold, Amazon claims the fee will help keep prices low in our online and physical grocery stores as we better cover grocery delivery costs and continue to enable offering a consistent, fast, and high-quality delivery experience.”

Charted: How much will Amazon Fresh grocery deliveries cost after Feb. 28?

Whom will the Amazon Fresh delivery fee hurt the most?

Disgruntled users took to Twitter to lament the introduction of the tiered fee system, saying they’d abandon the service for the likes of Instacart or Walmart, which have lower barriers for free delivery.

The move was also viewed as discriminatory. Specifically, single-person households will struggle to rack up the bill amount. “My grocery bill is NEVER $150 at one time,” one such user wrote. Low income users—especially those who don’t have a car or don’t drive—as well as the elderly and the handicapped will also be hit hard.

Besides customers, Amazon’s delivery workers will also face the negative consequences of these delivery fees. Customers will be more reluctant to tip drivers, putting their money towards the delivery charge instead. Will Amazon increase the drivers’ wages to compensate?

Why is Amazon increasing grocery delivery fees?

The new delivery fees fit into Amazon’s bigger ambition to shrink costs dramatically.

The company has already trimmed its workforce, cutting 18,000 jobs earlier this month. It has also been streamlining its business. Last year, Amazon, which once promised to become Earth’s biggest bookstore,” shut 68 book shops, alongside other retail experiments. The telehealth service Amazon Care, built in house for businesses and employees, was axed in August 2022.

Most recently, in a jarring move for nonprofit beneficiaries, the company decided to wind down its charity program Amazon Smile.

Quotable: The headwinds Amazon faces, according to its CFO

“The continuing impacts of broad-scale inflation, heightened fuel prices and rising energy costs have impacted our sales growth as consumers assess their purchasing power and organizations of all sizes evaluate their technology and advertising spend,”

Amazon’s chief financial officer Brian Olsavsky, during the Oct. 27 earnings call. The next earnings are out on Feb. 2.

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