money Amazon Fresh is beating Walmart and Kroger on grocery prices
Amazon continues its land grab in the grocery market by aggressively pricing common items and eliminating Amazon Fresh delivery service fees for Prime members.
To siphon off customers from its biggest supermarket rivals – Walmart and Kroger – the e-commerce giant is undercutting prices on key items, according to an industry note released Monday by Oppenheimer.
Comparing 35 common grocery items in Plano, Texas, Oppenheimer found that prices for Amazon Fresh and Walmart and its delivery service were similar, while Kroger and its delivery service came in a distant third on price.
But Walmart was only competitive against Amazon Fresh if the consumer subscribed to Walmart’s unlimited grocery deliveries, which runs $98 a year, and shops three times per month. Walmart is “less compelling if the consumer pays on a per order basis,” the note said.
The head-to-head comparison comes after Amazon last month announced it won’t charge Prime members for Amazon Fresh. Previously, Prime members had to pay $14.99 per month for the additional benefit. The service isn’t available to non-Prime members.
Among the 35 items in the mock grocery haul were popular items like Heinz Ketchup, Creamy Skippy Peanut Butter, Tostitos Medium Chunky Salsa, organic strawberries, raspberries, cantaloupe and Vanilla Bean Haagen-Dazs Ice Cream.
The cart totaled $100.93 when purchased with Amazon Fresh, only $1.15 more than the $99.78 at Walmart. The same haul at Kroger cost $112.69.
Walmart and Amazon’s models are built on membership fees. Walmart’s Delivery Unlimited is $98 for the year or $12.95 per month, while Amazon’s Prime is $119 annually.
Kroger relies on third-party partners for its grocery delivery and instead of a subscription or membership plan, a $5.95 delivery fee and a $6 service charge is passed along to each customer on a per-order basis.
“We overall view [Amazon’s] new efforts as another headwind to leading food retailers,” the note concluded. “[Walmart] and others could be forced to move more aggressively to lower delivery costs down the road.”
Stephanie is a writer for Yahoo Finance. Follow her on Twitter @SJAsymkos.
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