Amazon is merging Prime Now and AmazonFresh (AMZN)

pulse

February 20, 2018 4:02 PM

While a true merger between the two, where one brand disappears into the other, may not occur, the services appear to be poised to work together and integrate their operations.

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Amazon is merging its Prime Now delivery service with AmazonFresh, its grocery delivery service,according toYahoo Finance.

The e-commerce titan has been consolidating the services’ staffs, which has led to some layoffs, and Stephenie Landry, the VP of Prime Now and Amazon Restaurants, has recentlytakenthe lead for AmazonFresh as well.

Amazon has been closing AmazonFresh’s operations in some markets, signaling that such a move might be coming. Amazon ended AmazonFresh’s operations in parts of California, Connecticut, Delaware, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, and Virginia this past November, likely because the service wasn’t drawing enough interest in those areas. While this move wasn’t a full closure of AmazonFresh, it suggested that Fresh was struggling to some degree, and that Amazon wanted to scale it back rather than try to improve it. The reported consolidation with Prime Now would be the next step in Amazon changing its online grocery strategy.

It's not clear what Amazon’s grocery service will look like, as Prime Now and AmazonFresh are quite different.

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How Amazon marries the two services now will be incredibly important in how it performs in online grocery in the years to come. Amazon will likely find it difficult to offer Prime Now’s trademark two-hour delivery for all grocery orders, but it will need to decide what level of speed and convenience it wants to provide, and how much product selection it's willing to sacrifice to make it a reality.

It may choose to continue to offer separate services, one faster with less choices and one that takes longer with more products, but it's clear that AmazonFresh needs to be revamped given its recent closures. The grocery services that come out of this will likely be Amazon’s offerings for the foreseeable future, and their appeal will determine how Amazon fares in the valuable online grocery market as it takes off, making this integration incredibly important.

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