Amazon Expands Grocery-Delivery Service to San Francisco

Amazon.com Inc. (AMZN) expanded its grocery-delivery service to San Francisco, adding a third city in the Internet retailer’s push to broaden its offerings and lock in customers for its Prime subscription service.

The Seattle-based company today added San Francisco to its AmazonFresh website, saying that same-day delivery is available on orders of more than $35 for 500,000-plus items including bananas and broccoli crowns. The service, which isn’t available in all San Francisco zip codes, was rolled out in Seattle in 2007 and in Los Angeles in June.

The expansion of the grocery-delivery service represents an effort by Amazon Chief Executive Officer Jeff Bezos to bolster the reach of the world’s largest online retailer into daily necessities that customers can buy alongside purchases such as electronic gadgets. The company is particularly catering to its Prime members -- those who pay $79 a year for unlimited fast delivery and who are among the biggest spenders on Amazon’s website.

Amazon said its new Prime Fresh service will cost $299 a year after a free 30-day promotion. Existing Amazon Prime members will have their current membership fees refunded on a pro-rated basis if they upgrade to the grocery-delivery service, according to the company’s website.

Bezos has been pouring money into new initiatives to add to the types of goods Amazon sells online as well as how quickly the products are delivered. Bezos said in an interview with “60 Minutes” earlier this month that the company was testing package delivery by drones and would start using the flying machines within five years pending Federal Aviation Administration approval.

The CEO said in the same interview that the reason Amazon’s grocery service hasn’t expanded faster is that he needed to ensure that the financials made sense, a nod to failed attempts by Internet companies during the late 1990s dot-com boom to deliver groceries after taking orders online.

To contact the reporter on this story: Jordan Robertson in San Francisco at jrobertson40@bloomberg.net

To contact the editor responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net

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