AMZN Amazon.com Inc

By Laura Stevens 

Amazon.com Inc. on Tuesday said it is launching a new grocery-store pickup service, pushing deeper into brick-and-mortar retail as it moves to capture more of what people spend on food.

The service, called AmazonFresh Pickup, will be available to customers who are part of Amazon's membership program Prime. For now, the service's two locations in Seattle are open only to employees.

AmazonFresh Pickup will allow customers to choose from thousands of items online and reserve a time for pickup, according to the company. Orders will be ready in as little as 15 minutes, and there is no minimum-order limit. Amazon will select the food, bag it and deliver it to customers' vehicles.

The new stores are part of Amazon's broader push into brick-and-mortar retail and the grocery business, opening the door to a key driver of consumer spending that would broaden the online giant's increasing dominance in the retail market.

It will also help Amazon better compete against rivals such as Wal-Mart Stores Inc., which is also bidding to conquer online grocery shopping. Wal-Mart is expanding a service that lets shoppers order online and pickup curbside to 1,000 stores by the end of next year. Supermarket chain Kroger Co. is also offering a click-and-collect service in more stores.

Consulting firm Kantar Retail estimates that online grocery spending is around 1% of the $674 billion U.S. market for edible groceries.

Amazon's lack of physical stores has been a competitive disadvantage when it comes to groceries. Until now, its strategy has centered around AmazonFresh, a subscription service that promises quick food delivery for online orders. But delivering groceries can be expensive and logistically complex, as drivers race to deliver cold items on less profitable routes. And many shoppers still prefer to smell and touch items like fruits or vegetables before making a purchase.

The new service is Amazon's latest foray into physical stores. The company opened a convenience-style store in Seattle called Go, but it has faced technological problems as the company develops a location without lines or cashiers. Amazon also has five bookstores, with five more announced, and about 30 mall pop-up stores.

Amazon is also considering additional grocery store formats.

The new pickup locations will be free and unlimited to Prime members, who pay $99 a year for membership. AmazonFresh members, who pay an extra $14.99 a month, can get their orders turned around in a shorter time, according to Amazon's website.

The Wall Street Journal previously reported Amazon was planning pickup grocery locations.

Write to Laura Stevens at laura.stevens@wsj.com

(END) Dow Jones Newswires

March 28, 2017 14:17 ET (18:17 GMT)

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