Amazon.com says it has expanded its grocery delivery service to Los Angeles and might add more markets.
The online retail giant has been testing AmazonFresh in Seattle for several years. It confirmed Monday that it is now offering it in Los Angeles on a trial basis as well.
Grocers have tried for years to perfect the online grocery delivery service, with mixed results. While there are a number of brands in the online grocery graveyard, companies such as Peapod, Safeway and FreshDirect are still giving it a go as shoppers seem to appreciate the ease of the service.
Amazon.com Inc. says it is excited to test Los Angeles as a new market. The company remained vague about any future expansion plans, saying only that they know customers value the service but that "the economics remain challenging."
"We will continue experimenting and innovating on behalf of our customers to find a model that works," the company said in a statement.
Amazon customers in L.A. can now order more than 500,000 items for same-day delivery, including products from specialty stores around the city.
The service is free for Amazon Prime members for 90 days. After that, customers must sign up for a new Prime membership program that costs $299 a year. Delivery is free for any orders over $35.
Some believe an AmazonFresh expansion lays the groundwork for a broad-scale same-day delivery service, something Amazon already is trying in select cities.
AmazonFresh "can take an order at 1 a.m., put it on a truck seven hours later and get it to a house that afternoon," said Ben Burke, director of the retail and consumer products practice at Point B, a Seattle-based consulting firm.
"Another retailer, unless they build their own delivery capability, won’t be able to provide the same level of service."
Internet giants eBay and Google are exploring same-day delivery in partnership with big-name store chains, including Target and Walgreens.
Walmart offers same-day, in-store pickup of purchases made online, and Macy’s uses stock from its stores to fill Web orders more quickly.
Meanwhile, Amazon is testing package drop boxes in convenience stores and malls, possibly paving the way for same-day delivery at no extra cost.
The drop boxes, called Amazon Lockers, provide a secure location for customers to pick up their online orders.
The lockers also help Amazon save time and money on shipping, because it’s easier to deliver packages to a 7-Eleven or a Staples store rather than separate doorsteps.
It’s no wonder Amazon supports federal online sales-tax legislation, said Eric Best, chief executive of Seattle-based Mercent, which helps businesses with their online strategies.
"They no longer have to worry about the placement of lockers in a city or state creating inadvertent tax liability," Best said.
"This allows them to be more aggressive with experimentation."