On Wednesday, Amazon announced a major expansion of its same-day fresh grocery delivery service to 1,000+ U.S. cities. Prime members ($14.99/month or $139/year) will get their groceries delivered within hours for free on $25+ orders. Smaller orders will be delivered to Prime members for $2.99 (most cities), and non-Prime customers pay $12.99 for orders of any size. Available groceries include thousands of items in produce, dairy, eggs, meat, seafood, frozen food, bread/baked goods, and deli/prepared foods. Amazon rivals’ stock prices tumbled in the wake of the announcement, with Walmart down 3.4%, Instacart down 14%, DoorDash down 6.3%, and Kroger down 5.1%, as of this writing. Even Costco is down 1.7%.

Amazon’s same-day grocery prices are set to lure in price-sensitive customers. For instance, a bunch of 4-5 bananas (a classic produce loss leader) is just $0.99; 2 lbs of white onions is just $0.65; a bunch of green onions is $0.50; a half-gallon of milk is $2.02; a dozen eggs is $3.39; and a whole chicken is $6.76. Unlike warehouse stores like Costco (or elsewhere on the Amazon.com site), customers can buy items in small quantities like a single avocado, lemon, or cucumber.

Amazon hopes same-day grocery delivery will encourage customers to buy more from other (non-grocery) same-day product categories (e.g. beauty & personal care, health & wellness, cleaning & household, electronics, pet supplies). Customers are likely to tack on additional products to their same-day grocery order, e.g. “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.” According to Amazon, customers can “check out with one cart and have everything delivered to their doorstep within hours.”

Amazon’s perishable grocery deliveries will be fulfilled through a specialized temperature-controlled network with 6-point quality checks and recyclable insulated delivery bags to preserve freshness. Amazon plans to roll out same-day grocery delivery to reach 2,300+ cities by end of 2025, with further expansion to even more cities in 2026.

The announcement comes amid a concerted push by Amazon in faster delivery. In 2024, 9B+ items were delivered via Amazon’s same- or-next-day service worldwide. That same year, Amazon expanded its US same-day delivery sites by 60%+. In H1 2025, the share of items delivered by Amazon via same- or next-day service grew 30%+ vs. the prior year. The recent grocery rollout is being supported by a $4B+ investment (announced in Jun 2025) to extend same-day and next-day coverage to 4,000+ small towns and rural communities by 2026, which would triple Amazon’s delivery footprint. Coverage has already been rolled out to 1,000+ small towns.

Amazon’s move puts more pressure on its rivals, along with their grocery and subscription offerings. Grocery has been a major growth area for ecommerce retailers like Walmart over at least the past 5 years. Retailers are using grocery to build buying habits among consumers – driving higher retention, attracting higher-income customers who value convenience, and contributing to higher-margin baskets that include non-grocery items. Amazon has found that grocery shoppers place orders 2x as often as non-grocery customers.

Amazon has been playing catchup in grocery – in part because of the challenge of delivering perishables using a fulfillment network designed for non-perishables. Now, however, it’s deeply committed and going full-throttle. Even before the recent expansion, Amazon was seeing $100B (2024) in annual sales of groceries and household essentials (not even including Whole Foods and Amazon Fresh) – with 150M+ Americans already used to buying groceries on Amazon. In Q1 2025 in the US, groceries and household essentials grew more than 2x as fast as all of Amazon’s other categories, accounting for 1/3 of units sold. Amazon’s pilot this year suggesting perishable groceries to users at the point of purchase of other same-day products was highly successful – 75% of customers who used same-day grocery in 2025 were 1st-time perishables shoppers, and 20% returned multiple times in their 1st month.

Amazon’s most impacted rival is likely Walmart. Walmart – the largest grocer in the US with a 20%+ market share – has been offering same-day grocery for years at this point. Grocery accounts for about 60% of Walmart’s US sales, especially after the fast-growing adoption of the Walmart+ subscription ($12.95/month or $98/year; includes free same-day grocery delivery on $35+ orders) since launching in late 2020.

Walmart’s fulfillment model leverages its existing store network, which is less nationally dense than Amazon’s planned perishables network. Its competitive edge has been grounded in its wide rural and suburban penetration and low pricing, and it looks like Amazon is pressing to compete on both fronts. Don’t count Walmart out though – it has many expansions in the works and is aiming to deliver to 95% of US households in under 3 hours by the end of 2025 (up from 93% today).

Instacart will likely struggle to compete with Amazon’s expanded service, since it lacks Amazon’s vertically integrated fulfillment and quality control. For customers, Instacart deliveries will often take longer and be more expensive. Its partnerships with multiple grocers, however, do allow for a broader product assortment than Amazon is currently offering (e.g. Asian groceries, specialty items).

Amazon is well-positioned to make in-roads into the $1T US market for grocery. Today, online grocery is still only 20% of that across the industry. While it took some time for Amazon to adapt its extensive fulfillment network for perishables, now that it has – or assuming that it has – that scale has the potential to enable a new strategic flywheel for Amazon, especially when combined with its existing data and assets. On top of that, the eventual (and inevitable) introduction of autonomous vehicles into last-mile delivery could later open up more margin room in same-day delivery.

For consumers who are already Amazon shoppers and especially Prime members, the combination of convenience, quality, and affordable pricing will be hard to turn down. The bundle is even more advantageous for young adults and government assistance/income-verified customers, who pay just $6.99-7.49/month for a Prime membership.

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