Amazon is racing to close the grocery gap with Walmart, doubling down on same-day delivery and fresh food expansion across the U.S. With service now live in 1,000 cities and plans to reach 2,300 by year-end, the e-commerce giant is reasserting its growth ambitions in one of the few markets it doesn’t lead.
Fresh Focus: Amazon’s High-Stakes Grocery Gamble
Amazon’s latest push into same-day grocery delivery reflects its most aggressive move yet to gain ground in a sector long dominated by Walmart. The company’s new rollout includes 1,000 cities such as Phoenix, Orlando, and Kansas City, with plans to expand to 2,300 locations by year’s end. By waiving delivery fees for Prime members, Amazon aims to spike order volume and loyalty while drawing shoppers away from rivals.
The market reaction was swift. Shares of grocery delivery players tumbled following the announcement: Maplebear, Instacart’s parent, fell 11%, DoorDash dropped 4%, and Kroger declined 4.1%. Even Walmart, whose robust footprint gives it a logistics edge, saw shares slip 1.7%.
While Amazon remains the largest player in e-commerce overall, it still trails Walmart in online grocery. According to eMarketer estimates, Walmart commands more digital grocery sales, thanks in part to its dense store network and ability to offer same-day service to over 90% of the U.S. population. Amazon’s retail chief Doug Herrington has acknowledged the uphill battle, citing the logistical complexity and lower margins of perishable goods as ongoing hurdles.
Rebuilding Momentum After Mixed Bets
Amazon’s expansion comes as it seeks to reenergize growth across its consumer-facing businesses. Recent moves into healthcare, personal electronics, and brick-and-mortar formats have yet to deliver the dominant returns investors expect. Wall Street’s frustration was evident when slowing cloud-computing growth from AWS triggered a 7% drop in Amazon’s stock last month.
CEO Andy Jassy has pointed to grocery as a core part of Amazon’s growth roadmap. In a 2023 internal memo, he pegged the U.S. grocery market at $800 billion, a figure that IBISWorld now estimates at $875 billion. While Amazon’s 2024 grocery and household goods gross sales exceeded $100 billion (excluding Whole Foods and Amazon Fresh), most of that volume came from pantry staples, not perishables.
That’s changing. In July, Amazon said three-quarters of shoppers who bought fresh food on its platform this year were first-timers. The company is now stocking produce and refrigerated items closer to customers by integrating fresh inventory into last-mile delivery hubs. This operational shift dovetails with Amazon’s June pledge to expand same-day and next-day delivery to more than 4,000 smaller markets and invest $4 billion to triple its logistics network by 2026.
What Competitors May Be Overlooking
While Walmart continues to benefit from its hybrid store-to-door model, Amazon’s infrastructure-heavy approach may unlock a different kind of resilience, one less tethered to store locations and more adaptable to evolving urban and rural delivery demands. As consumer expectations shift toward speed, variety, and digital convenience, the real competitive edge may lie not just in last-mile logistics, but in how quickly players can rewire their networks to meet those expectations at scale.