How Does Amazon Prime Now Pricing Compare?
Amazon Prime Now launched in Denver in mid-June so we compared the Amazon Prime Now prices to local grocery stores to see how Amazon fares in Colorado.
Exclusive to Amazon Prime members, who pay $99 a year for membership, Prime Now offers one-hour delivery for $7.99 and two hour delivery for free on thousands of items. Items available for delivery include packaged grocery products, household essentials such as bath tissue and laundry detergent as well as pet foods, and you can also order fresh groceries from Sprouts Farmers Market.
How do the prices of Amazon Prime Now compare to local Colorado grocery stores?
We compared 19 popular items including Tide, Starbucks Coffee, Horizon Organic Milk, Coke 12 packs, Chobani Greek Yogurt, Tostitos chips and Huggies diapers for 3 weeks across King Soopers, Safeway, Target, Walmart and Amazon Prime Now. We did not compare the Sprouts prices for this exercise.
An interesting result was Amazon’s price fluctuations week over week. Over the three weeks of our study, we saw Amazon’s prices for the same 19 items increase by 8% from $72.55 in week 1 to $80.19 in week 3. Walmart and Target who employ a EDLP (Everyday Low Price) strategy were fairly consistent over the three weeks, and Target was even 3% less expensive from week 1 to week 3.
In week 1, Amazon Prime Now was the cheapest, beating local Colorado grocery stores by an average of $4.50, or 6%, but by week 3, Amazon was more 8% expensive than Walmart and Target , 2% more than King Soopers and was just $.28 cheaper than Safeway for the same list.
So, what’s the bottom line? You can’t assume any single grocery retailer is the cheapest everyday. Prices fluctuate frequently and you need to compare prices to be sure you are not getting ripped off and to be sure to paying the least for groceries every trip or every order. Using tools like uGrocery, that give consumers price transparency insights across local stores will allow shoppers to maximize their dollars spent and save the most.
While Amazon Prime Now pricing is competitive with local grocery stores, their selection is not. If you are looking for conventional bread, milk, butter and eggs, you’ll be hard pressed to find these items on Amazon Prime Now. If you want organic bread, organic milk, organic butter and organic eggs, you will be pleased to see a few brands of each on Amazon Prime Now (mainly Horizon Organic and Organic Valley), but be prepared to pay the organic prices, which are a premium to conventional prices for these items.
Even more – with Amazon Prime Now, it will be interesting to see if pricing disparities among flavors of a particular product will drive purchase behavior. Unlike the traditional grocery stores and super centers who have the same pricing strategy for a like product size, Amazon’s pricing varies for like products. Case in point, this Pace Salsa 24 oz. shown from the Amazon Prime app below. Depending on which level of spice you like, you could pay $.85 more for the Pace medium salsa in lieu of the mild salsa.