Amazon expands grocery delivery service to Brooklyn

[October 17, 2014]  By Deepa Seetharaman

SAN FRANCISCO (Reuters) - Amazon.com Inc is expanding its online grocery delivery program to Brooklyn's well-heeled Park Slope neighborhood on Friday, giving the No. 1 U.S. online retailer a foothold in one of the wealthiest and densest markets in the United States.

The AmazonFresh program, which offers same-day or next-day delivery on more than 500,000 items including fresh and frozen groceries, will soon expand to other areas in Brooklyn.

The move is part of Amazon's slow build-out of its "Fresh" program, targeting one of the largest retail sectors yet to be upended by online commerce. Amazon declined to say if it will expand to Manhattan or other parts of the New York metro area.

"Currently, we are offering AmazonFresh in Brooklyn and will continue being thoughtful and methodical in our expansion," an Amazon spokeswoman said in an e-mail.
 

Groceries have proven to be one of the toughest sectors for technology companies to manage, and Amazon faces competition from established companies like FreshDirect as well as fast-growing startups like Instacart.

But a successful foray in Park Slope could help Amazon cement customer loyalty and boost sales, especially among wealthy and middle-class families, analysts have said.

The top 10 to 20 percent of wealthiest Americans spend between 3 and 4 times more on food than the average American family, according to Bill Bishop, chief architect at Brick Meets Click, a consulting firm focused on retail technology.

"They are the sweetest of shoppers so anybody who attracts that business is taking the cream of the market," Bishop said.

Amazon could also use its Fresh program to experiment with its own delivery service, analysts have said.

Amazon tested Fresh in Seattle for five years before adding Los Angeles and San Francisco in 2013. The New York metro area presents very different logistical challenges, including a much higher population density.

Fresh will be offered for free to Brooklyn-based members of Amazon's $99-a-year Prime program through the end of the year. After that, Amazon will charge $299 a year for its "Prime Fresh" program, which combines grocery delivery with free two-day shipping and other perks of Prime.

(Reporting by Deepa Seetharaman)

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