Amazon Just Crushed Instacart--And It's Not Even Close

Amazon (NASDAQ:AMZN) is ramping up the pressure on the grocery sector. The company just announced plans to expand its same-day grocery delivery to 2,300 U.S. cities by year-endmore than double its current footprint. Prime members will receive the service free on orders above $25, undercutting delivery minimums from rivals like Walmart and Kroger. Non-members will be charged $12.99 per order. The new offering includes fresh produce, meat, seafood, frozen goods, and household essentialsblending Amazon's core strengths in e-commerce with an ambitious push into perishable grocery.

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The market reaction was immediate and sharp. Instacart dropped nearly 11%, marking its steepest slide in months. Kroger fell 4.3%, while Walmart and Ahold Delhaize each lost 1.3%. Bloomberg Intelligence analysts noted that Amazon's low order minimum and bundled delivery model could pull on-demand shoppers away from competitors already struggling to rein in logistics costs. While Amazon shares moved less than 1%, the move reinforces its strategy of compressing margins across entire industries to grab long-term market share.

This isn't Amazon's first swing at fresh food, but it could be its most coordinated. The company already owns Whole Foods and operates stores under the Fresh banner, yet has wrestled with making grocery logistics profitable. What's different now? The timing. Recent earnings from Uber Eats (NYSE:UBER), DoorDash (NASDAQ:DASH), and Instacart suggest consumers haven't ditched deliveryeven with inflation top of mind. If Amazon can integrate its physical stores with a wider same-day delivery network while leveraging Prime incentives, it may finally start to chip away at Walmart's edge in food retail.

This article first appeared on GuruFocus.

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