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Amazon Opens New Fresh Grocery Chain

By Howard Smith – Aug 27, 2020 at 8:59AM

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Amazon is turning its grocery delivery business into a new chain of physical stores that complement its Whole Foods brand.

Amazon (AMZN 3.15%) is set to open the first physical store of its Amazon Fresh grocery business this week. Amazon first jumped into the grocery business with the acquisition of the natural and organics chain Whole Foods Market in 2017. 

The first new Amazon Fresh store, located near Los Angeles, will be the first of the chain that is intended for a different customer than Whole Foods. The company said it will focus on low prices and offer a range of national brands at its Amazon Fresh stores, making it more of a competitor to chains Kroger or Albertsons than Whole Foods.

amazon dash cart in fruit and vegetable aisle

Image source: Amazon.

Amazon also said it will introduce its new Dash Cart in the stores, providing customers a faster shopping experience without needing to go through check-out lanes. The Dash Cart is linked to the Amazon smartphone app, allowing customers with a maximum of two grocery bags to simply place groceries in the cart and exit. It also has a screen that can show Alexa shopping lists to users.

The Amazon Fresh delivery service has been available in select cities exclusively for Amazon Prime members. Beginning today, some customers will be able to shop in the physical Amazon Fresh store, by invitation only. It will be open to all customers in the coming weeks, the company said. 

Amazon Fresh stores will combine the convenience of online shopping with the in-store experience, and will offer same-day delivery or pickup options for Prime members. Amazon.com customers will also be able to pick up or return packages at the Fresh stores. 

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Howard Smith owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.

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