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The Street
The Street
Daniel Kline

Amazon Plans to Partner With Grocery Chains While It Competes With Them

Amazon  (AMZN Get, Inc. Report could be rolling out its U.K. version of Instacart called Amazon Fresh Marketplace in the U.S. and Europe in 2022.

As a logistics powerhouse, Amazon intends to use its shipping ability with grocery stores in the U.S. and start offering delivery services, similar to the current offerings of privately-held Instacart, according to an article in The Information.

While Instacart has dominated grocery delivery, Amazon has been building up its food offerings, including acquiring Whole Foods for $13.7 billion to adding Amazon Fresh, its current grocery delivery company, and Amazon Go, its convenience stores that do not have cashiers and are contactless.

Amazon Takes on Partners

In the U.K., grocers such as Morrisons and Co-op partnered with Amazon Fresh Marketplace and Amazon Prime members could receive orders the same day.

Amazon spokesperson Jessica Canfield said that partnerships with other grocery stores give customers more options and the ability to shop online, but did not comment on providing a delivery service in the U.S,, according to the article.

Since the start of the global pandemic, shoppers turned to grocery delivery or curbside pickup in the U.S. 

An estimated 69 million households purchased groceries online in November, which is a 15% gain from 2020, according to a Brick Meets Click/Mercatus Grocery Shopping Survey. 

Home delivery rose by 6% from the previous month while in-store and curbside pickup increased by 29% compared to a year earlier.

Instacart has been building up its offerings by working with grocers to build smaller warehouses to fulfill orders. The company has also launched deals where consumers can receive deliveries within 30 minutes by partnering with two major supermarket chains, Publix and Kroger  (KR Get Kroger Co. Report.

Will Grocery Chains Want to Partner with Amazon?

While Amazon has made some overseas partnerships for its Instacart-like service, it remains to be seen whether U.S. grocery chains will want to partner with the company. 

Amazon competes directly with grocery stories and delivery through its Whole Foods brand and its nascent Amazon Fresh grocery stores. And while it only owns a handful of Fresh stores (18 as of August), it has been slowly adding to that total — and the online retailer also delivers groceries and uses its physical stores to draw attention to that, according to Supermarket News.   

“These stores are located to raise awareness with a large number of customers and alert them that Amazon Fresh now has a physical presence in the market that meets a broad range of shopper needs,” according to Supermarket News contributor Bill Bishop, chief architect of strategic advisory firm Brick Meets Click. 

“This physical presence gives them 24/7 visibility and provides confidence — for those shoppers who need it — that when they’re shopping online they are working with a real grocery store, not just an anonymous online provider.”

Fresh and Whole Foods, along with Amazon's grocery delivery efforts make it a competitor — at least in some markets — with many of the chains it would want to partner with. 

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