Amazon Plans to Launch Prime Now Service in Canada This Year

Move marks a move that marks a broader push into the country

Amazon.com Inc. is working on plans to roll out its one- and two-hour membership delivery service into Canada later this year, a move that marks a broader push into the country by the Seattle-based retailer, according to people familiar with the matter.

Amazon could begin offering its Prime Now service in Vancouver and Toronto in November and January, respectively, under a pilot program that will deliver groceries and other items within a two-hour window, according to a person familiar with the matter. If the initial launch is successful, Amazon will consider expanding its Prime Now service to various Canadian cities later next year, the person said.

Amazon’s upcoming Prime Now roll-out comes after the online retailer closed its acquisition of natural grocer Whole Foods Market Inc. on Monday, a deal that already has put pressure on Canada’s leading grocers. Amazon owns 13 Whole Foods stores in Canada, most of which are located in Toronto and Vancouver.

Grocery items are expected to be a strong selling feature for Amazon Prime Now in Canada, according to documents viewed by The Wall Street Journal. The online retailer said in a presentation to suppliers that its Prime Now members will have access to a selection of grocery items, including produce, dairy, frozen food and health and personal care items alongside thousands of other items from the company’s Canadian website.

The company also plans to partner with local Canadian bakeries, butchers and other grocers for its Prime Now service.

Amazon’s Prime Now service offers the company’s Prime members, who pay 79 Canadian dollars ($63) annually, free delivery options within a two-hour window, or it will fulfill orders within one hour for a service charge. The service is already available in nine countries including Japan, Singapore and the U.K.

Amazon’s Fresh grocery delivery service, which costs U.S. customers $14.99 on top of annual Prime membership, is not yet available in Canada.

“Amazon is not able to match the Canadian grocers in terms of procurement scale,” he said.

An Amazon spokeswoman declined to comment on future strategy.

The move comes as the company announced in June it plans to hire 200 more software developers, engineers and programmers in Toronto. It also has about 300 job postings for its Vancouver office on its Canadian website. Amazon has approximately 2 million square feet of fulfillment space in Toronto, as well as 741,000 square feet in Vancouver.

Grocery spending in Canada is approximately worth C$103 billion, but just 1.9% of that is spent online, according to Nielsen Co. Online grocery shopping is expected to grow to 5.3% of total spending by 2020, accounting for C$6 billion in sales, Nielsen said.

Any further entry by Amazon into the Canadian grocery-delivery space is expected to weigh on companies such as Loblaw Cos. Ltd. and Empire Co. Ltd. as well as the domestic arms of stores such as Wal-Mart Stores Inc. and Costco Wholesale Corp. , which all have explored shipping online grocery orders to Canadian doorsteps.

Urbery, a Toronto-based startup that had been shipping groceries directly to customers in the city since 2015, recently shut down its delivery service after determining that fresh-food delivery was unprofitable for the company, said Mudit Ramat, Urbery’s Chief Executive. He added that a firm would need significant scale to be successful in the market.

“You don’t make a lot of money shipping lentils,” he said.

Source: Wall Street Journal,  “Amazon Plans to Launch Prime Now Service in Canada This Year”.(https://www.wsj.com/article_email/amazon-plans-to-launch-prime-now-service-in-canada-this-year-1504213573-lMyQjAxMTA3MTA1MTcwNTE1Wj/). David George-Cosh, August 31, 2017.

Image Source: July 27, 2017. JOSEPH NAIR/ASSOCIATED PRESS

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