AmazonFresh, the e-commerce behemoth’s grocery service, will start operating in parts of north and east London today. Deliveries will first be available in 69 postcodes before expanding to other parts of the city.
AmazonFresh is only available to Amazon Prime subscribers who also pay a monthly fee of £6.99. This means Amazon Fresh will cost them about £84 ($121.85) a year—much less than the $299 annual membership fee charged in the United States, where the service has been available since 2007.
Its pricing strategy may change, however, as Amazon figures out how much consumers in the United Kingdom are willing to pay and balances that against the grocery industry’s tight margins. In the U.S., Amazon Fresh did not cement its $299 annual fee until last October, more than 10 months after it was first announced, because of pushback from customers.
Amazon Fresh will compete against several of the United Kingdom’s largest supermarket chains, including Tesco, Ocado (Waitrose’s online market), Sainbury’s, and ASDA, which already have online grocery shopping. Several (Tesco, Ocado, and ASDA) even offer same-day deliveries in certain areas.
Amazon, however, wants to up the ante with one-hour deliveries. Amazon Fresh vice president Ajay Kavan told the Guardian that it will also compete with lower prices on some items and wide selection (about 130,000 items are currently available).
Amazon signed a wholesale supply deal with Morrisons in February, so it can sell inexpensive fresh and frozen white-label products from the grocer through its site. Most of its inventory, however, will be branded products.
The company started gradually rolling out quick-delivery grocery services in the U.K. last fall. In September, it began testing one-hour deliveries of fresh and frozen foods through its Prime Now program in Birmingham. It also launched Amazon Pantry, which offers next-day delivery of household goods and non-perishable food like canned soup and dry pasta, in November. It has sold food items through its main U.K. site since 2010.