Grocery wars! Amazon expands food delivery to 1,000 cities in push to compete with Walmart

In 2024, Amazon raked in more than $100 billion in gross sales of groceries and household essentials — excluding Whole Foods and Amazon Fresh

Amazon customers across 1,000 U.S. cities can now order same-day grocery delivery as the tech giant tries to take a bite out of Walmart’s online grocery business.

The retailer offered same-day delivery in Phoenix, Orlando, and Kansas City for perishable foods and has now expanded its operation to include hundreds of other regions, the company announced Wednesday. Amazon plans to roll out the service to 2,300 cities by the end of 2025.

“Millions” of items, such as everyday household essentials or electronics, were already available to be delivered on the same day as they were ordered, the company said.

For Amazon Prime members, same-day delivery is free for orders over $25 in most cities; there’s a $2.99 fee if that minimum is not met. For customers without Prime, the service is available with a flat $12.99 fee.

The focus on the quick delivery of groceries seems to be the company’s latest attempt to compete with Walmart, which leads the e-commerce grocery market.

Amazon has announced it’s expanded same-day delivery operations to 1,000 cities as the retail giant takes on Walmart’s online grocery business (Copyright 2020 The Associated Press. All rights reserved)

Walmart can deliver to 93 percent of U.S. households on the same day, according to a Q4 earnings release. The store held the title of top online grocery retailer in terms of sales, eMarketer found in January.

“Consumers are doing more comprehensive grocery shopping at Walmart, whereas, with Amazon, shoppers tend to do more one-off purchases,” analyst Blake Droesch said in a statement at the time.

Other players, including Uber, DoorDash and InstaCart, are popular in the food-delivery space. But nearly three quarters — 72 percent — of U.S. digital grocery sales will come directly from retailers, like Amazon or Walmart, according to eMarketer.

Amazon Fresh, which the company launched in 2007, now has dozens of physical stores across the country (Getty Images)

Amazon CEO Andy Jassy told shareholders in April 2023 that he hoped the company would expand in the $800 billion grocery business market. “Grocery is a big growth opportunity for Amazon,” he said.

That mission has been fruitful.

Last year, Amazon raked in more than $100 billion in gross sales of groceries and household essentials. That figure excludes Whole Foods and Amazon Fresh. More than 2 billion groceries and household essentials were delivered the same or next day in the U.S. in 2024, the company reported in June.

Amazon, once known only as an online bookseller, jumped into the grocery business nearly two decades ago. The retail giant began offering groceries on its website in 2006. The following year, it launched Amazon Fresh, which initially delivered groceries via van to a Seattle suburb, The Guardian reported in 2007.

By 2020, the tech giant opened physical stores in Chicago and Los Angeles, boasting innovative technology that allowed customers to walk out of the store with their goods and pay for them without having to stop at a cashier. There are now 63 Amazon Fresh stores across the country.

The company also purchased Whole Foods in 2017 expanding what would become its grocery empire.