Amazon Courts Food Shoppers Ahead of Thanksgiving

Amazon wants you to order your turkey, stuffing and cranberry sauce online this Thanksgiving -- its latest effort to make its Prime subscription service a central part of food shopping, much the way it's done for other consumer goods.

Right before the cooking-heavy months of November and December, Amazon rolled out a monthly payment option for its grocery delivery service, AmazonFresh. On Monday it expanded to several new cities including Chicago and Dallas.

Amazon -- which has been working on expanding grocery delivery since 2007 -- is taking aim at the $650 billion grocery industry. It's a highly competitive arena filled with rivals like Walmart and Instacart trying to lure customers away from traditional grocery stores. Some reports suggest that Amazon plans to open grocery stores of its own, but the company has declined to comment.

"Grocery is a massive market opportunity for them," said R.W. Baird analyst Colin Sebastian. It's a notoriously tough business with low margins, since it's expensive to store and transport produce. But Amazon has spent years ironing out the kinks with its delivery service, he said.

Amazon near-decade of experimentation "gives them the scale and expertise that comes with time, allowing them not only to fine tune the service, but also perhaps accelerate the rollout into other areas," Sebastian said.

Humble Beginnings

Amazon started its grocery delivery business around its home town of Seattle, and has since expanded to about 18 cities and regions, including London and New York. It has changed its pricing structure, too, having started with an annual $299 fee that included Prime membership. Its monthly pricing program -- $15 a month for members of its $99-a-year Prime loyalty program -- started earlier this month.

Amazon doesn't disclose whether or not grocery delivery is profitable, but analysts say it's probably not. Rather, it's a way to drive revenue growth...

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