Amazon takes on Instacart & Walmart, adds perishable foods to same-day delivery in US

New York: Subscribers to Amazon.com's Prime service can now get strawberries, milk, meats and frozen dinners on the same day they order them as the company expands its fast-delivery option to perishable food items, Amazon announced on Wednesday.

It is the latest move by Amazon to compete with grocery delivery services offered by Walmart+ and Instacart.

Shoppers in more than 1,000 US cities - including Phoenix; Raleigh, North Carolina; and Tampa, Florida - can get doorstep delivery within hours, while Amazon plans to expand the service to 2,300 cities by the end of the year. The company announced in June it is investing $4 billion to bring same-day and next-day delivery services to more than 4,000 rural U.S. communities by the end of the year.

Previously, Prime subscribers' grocery orders were fulfilled through Amazon Fresh or Whole Foods. Now the additional service will complete orders through its same-day delivery logistics locations.

Same-day delivery is free for Prime members, who pay $14.99 monthly or $149 annually, for orders over $25. Walmart's membership service, Walmart+, costs $98 a year and offers same-day delivery in under three hours - with some orders arriving in as little as 30 minutes.

"Notably, Amazon has lowered the minimum order threshold to just $25 - a move that directly threatens Instacart by enabling customers to use Amazon for quick, one-off purchases, a core part of Instacart's value proposition," said Blake Droesch, analyst with eMarketer.

Instacart's stock slumped 12% in early trading on Wednesday, while Walmart and Kroger were down about 2% and 5%, respectively. Amazon shares were up about 1%.

As the largest grocery retailer in the United States, most of Walmart's deliveries tend to be dry groceries and perishables.

In May, Walmart said it will soon be able to offer delivery within three hours to 95% of the U.S. population, and that faster delivery speeds are helping drive its business. Between February and April, Walmart reported a 91% increase in deliveries under three hours compared with the same period last year.

Amazon shoppers "can order milk alongside electronics; oranges, apples, and potatoes with a mystery novel; and frozen pizza at the same time as tools for their next home improvement project - and check out with one cart and have everything delivered to their doorstep within hours," Doug Herrington, CEO of Worldwide Amazon Stores, said in a press release.

E-commerce giant Amazon has struggled in previous years to get shoppers into its physical stores. While the company is focusing on its U.S. grocery experience, it is facing hurdles in the UK with its suppliers, a study by British grocery regulator the Groceries Code Adjudicator found.