Amazon's Grocery Expansion Plans Pose Challenge to Peers, Analyst Says

Amazon's expansion of same-day fresh food delivery to over 1,000 US cities and plans to reach 2,300 locations by year-end may challenge peers Instacart, Walmart, Kroger, and Albertsons. Morgan Stanley analyst Brian Nowak maintains a "Buy" rating on AMZN stock with a $300 price target, implying 33.6% upside potential. Nowak believes Amazon's move to capture a larger share of the $1.5 trillion offline grocery market will lower delivery costs and minimum basket size.

Amazon has announced a significant expansion of its same-day grocery delivery service, now including perishable food items, to over 1,000 cities across the United States. This move, which is part of Amazon's broader strategy to capture a larger share of the $1.5 trillion offline grocery market, is set to challenge competitors such as Instacart, Walmart, Kroger, and Albertsons [1].

The new service allows customers to order fresh food items, including dairy, meat, seafood, and produce, alongside their usual Amazon orders and receive them on the same day. This expansion is part of Amazon's ongoing efforts to simplify the grocery shopping experience, reducing the need for separate checkouts and delivery fees [1].

For Amazon Prime members, same-day delivery is free for orders over $25 in most cities, with a $2.99 fee for orders below this threshold. Non-Prime members can use the service for a $12.99 fee without an order minimum. The service is expected to reach 2,300 cities by the end of the year, with additional locations planned for 2026 [1].

Amazon's move has sparked a reaction among its competitors. Shares of Instacart parent company Maplebear (CART) tumbled more than 13% after the announcement, as investors anticipate increased competition from Amazon [2]. Walmart (WMT), Kroger (KR), and Albertsons Companies (ACI) also saw their stock prices decline, reflecting concerns about Amazon's growing influence in the grocery sector [2].

Morgan Stanley analyst Brian Nowak maintains a "Buy" rating on AMZN stock with a $300 price target, implying a 33.6% upside potential. Nowak believes that Amazon's expansion into same-day fresh food delivery will lower delivery costs and minimum basket sizes, making it more attractive to consumers [3].

While Amazon's success in the grocery sector has been mixed in the past, the company has demonstrated strong customer adoption for its fresh food delivery pilot program. Chief Executive Andy Jassy has expressed optimism about Amazon's grocery business, noting that the service has generated significant growth in the category of everyday essentials [1].

The expansion of Amazon's same-day fresh food delivery service is likely to have a profound impact on the grocery market, potentially reshaping the competitive landscape. However, the success of this initiative will depend on Amazon's ability to effectively manage its supply chain and maintain its commitment to low prices and customer convenience.

References:
[1] https://www.cnn.com/2025/08/13/food/amazon-grocery-delivery-expansion
[2] https://seekingalpha.com/news/4484645-amazon-rocks-the-grocery-sector-with-a-major-expansion-of-its-same-day-delivery-service-that-includes-perishable-food
[3] https://www.investors.com/news/technology/amazon-stock-grocery-delivery-expands-walmart-instacart/