Soon Amazon’s Prime Pantry customers will have the option to subscribe to a monthly membership rather than pay $5.99 per box of non-perishable household goods, reports CNBC. Instead of the per-box delivery fee for everyday essentials like cereal, snacks and cleaning supplies, members can subscribe to Prime Pantry for $5 a month. Those who don’t want to subscribe will have the option to opt out and pay $8 per box instead.
Bloomberg reports that Amazon (NASDAQ: AMZN) will roll out the changes gradually. In addition to saving money by paying a monthly subscription fee, members will also get free shipping on orders of $40 or more. Only Amazon Prime members are eligible to participate.
Prime Pantry launched in 2014 to allow consumers to buy everyday, regular sized non-perishable items. Boxes hold up to 45 pounds and can be shipped completely or partially full. They are delivered via ground shipping, so orders take anywhere from one to four business days for delivery. Prime Pantry services are not available in Alaska or Hawaii. In addition to offering convenience for busy consumers, they also offer coupons, weekly deals and discounts for buying specific items.
In related grocery news last week, Amazon announced that it was expanding grocery delivery from recently-acquired Whole Foods Market to the Atlanta and San Francisco markets. Prime members get free two-hour delivery on Whole Foods orders over $35. Now Amazon is delivering Whole Foods’ orders to six cities including Austin, Cincinnati, Dallas and Virginia Beach. Amazon expects to continue its expansion across the U.S. throughout 2018.
Shoppers will place their orders in the Whole Foods Market section of PrimeNow.com. Deliveries from Whole Foods via Prime Now are made between 8 a.m. to 10 p.m. daily. Two-hour deliveries are free, but Prime members can upgrade to an ultra-fast delivery within an hour for an additional $7.99 per order on orders of $35 or more.
‘We’re happy to bring our customers in San Francisco and Atlanta the convenience of free two-hour delivery through Prime Now and access to thousands of natural and organic groceries and locally sourced favorites,’ said John Mackey, Whole Foods Market co-founder and CEO, in a news release. ‘Together, we have already lowered prices on many items, and this offering makes Prime customers’ lives even easier.’
According to a recent survey, the U.S. online grocery market is estimated to generate sales of approximately $17.5 billion in the U.S. in 2018. By 2021, that number could reach as high as $29.7 billion.
In 2016, the retailer with the largest share of the market was Amazon at 26 percent, compared to Walmart, the next highest, at 16 percent.
The online grocery market is growing, and Amazon, of course, wants to stay at the head of the pack. By switching from a fee-per-box to a subscription model with Prime Pantry, Amazon can better predict its revenue and further solidify its relationship with Prime members. Amazon can also leverage the popularity of Whole Foods by making same-day deliveries via Prime Now.