Starting October 25, Whole Foods Market will impose a $9.95 grocery delivery fee, reports Bloomberg. The company has been testing the delivery fee in Boston, Massachusetts; Detroit, Michigan; Chicago, Illinois; Manchester, New Hampshire; Portland, Maine and Providence Rhode Island since the end of August. The change will roll it out in all of its markets next month. CNN reports that Amazon Prime members were notified of the change via email last week. This presumably means Prime members who have previously shopped through Whole Foods online.
In a statement, a Whole Foods spokesperson said, “Growth of delivery drives operating costs that we do not want to shift to product prices.”
The fee will cover operating costs on grocery deliveries, including equipment and technology costs. An extra fee will apply to one-hour deliveries, says CNN. Free grocery delivery used to be a perk for Amazon Prime members. Amazon acquired Whole Foods in 2017 for $13.7 billion. To continue to get free grocery delivery, Amazon Prime members will have to use Amazon Fresh and order a minimum of $35 of food and grocery items.
Grocery delivery and pickup
On its website, Whole Foods directs Prime members to shop with Prime in select markets based on zip code. Shoppers can enter their zip code and Whole Foods will let them know if grocery delivery is available in their market. Other markets may only offer pickup services at Whole Foods stores or certain Amazon Hub Counters or Amazon Locker locations.
“Prime members: Skip the lines, skip the hassle and get your Whole Foods Market favorites carefully packed and ready to go or delivered – all on your schedule. It’s that easy.”
The Whole Foods grocery site online looks almost identical to the Amazon Fresh app, though Whole Foods branded products are easier to find. Help and customer service are provided from the Amazon app.
The competition
Walmart: The retail giant’s Walmart+ subscription service offers membership for $12.95 a month or $98 a year, after a 15-day free trial. Members can get free delivery from their nearest Walmart store on orders of $35 or more. Some restrictions apply. For example, delivery times are available on a first-come, first-served basis, which is true of most services.
Safeway: Though Safeway offers promotions from time to time, they typically charge a $9.95 delivery fee. Currently, new customers with a $30 minimum order will get free delivery on their first order. Safeway and Albertsons stores are now offering a FreshPass food delivery subscription service for $99 a year, or $12.99 a month, after a 30-day free trial. With this subscription service, shoppers get unlimited free delivery, a $5 monthly credit for each month from the time they sign up through December 31, 2021, monthly exclusive Starbucks perks, rewards, a VIP customer service line, and other perks.
Kroger: The Kroger grocery chain operates stores under multiple brand names including Fred Meyer and QFC. They also charge $9.95 per grocery delivery. They are offering a Delivery Savings Pass for $79 a year. This food delivery subscription service gives members free delivery on grocery orders over $35. The savings pass is not available at all Kroger-owned brands.
Third-party services: In addition to the grocery store chain food delivery subscription services, there are services like Instacart and Shipt which are independent of the stores where their subscribers shop. For example, a Shipt member can shop at Target, Fred Meyer, QFC, Rite Aid, Safeway and other stores. They are not restricted to a specific store. Shipt offers one-time deliveries for a flat fee of $10, Shipt passes in increments of three and five to save 20%, or an annual unlimited delivery pass for $99 for same day delivery. A minimum order of $35 may apply. Instacart fees start at $3.99 for same-day orders over $35. They may be higher for one-hour deliveries and deliveries under $35.
Insider Take
While the $9.95 delivery fee may be a surprise to some Whole Foods shoppers, especially Prime members who previously enjoyed this perk for free, the world has changed in the last 19 months. Millions more of us are working from home and are shopping from home during the pandemic to avoid contact with others. This huge increase in orders drives up costs for companies like Whole Foods. If the initial went well, and this fee does not substantially decrease sales, it is possible that Amazon will impose a similar fee for Amazon Fresh grocery orders.
