In late 2019, Amazon nixed the $15 monthly fee that Prime members had been paying to use its grocery delivery service, Amazon Fresh. For $119 a year, they could order virtually anything with free, fast shipping and stream tens of thousands of titles on Prime Video. Now Prime’s bundled services would include unfettered access to grocery delivery, too (with a minimum order of $35 in most regions).
Stephenie Landry, Amazon’s vice president of grocery, was tasked with the logistical challenge of a projected surge in demand from Prime members. But she couldn’t have predicted the kind of demand that was sparked by the pandemic. “We were expecting and preparing for a very big growth year and extremely excited about the trajectory of the business,” Landry says. “We were really happy with our results—and then March came, and wow, it was quite a surprise. It was a really difficult year because the spike in demand was so unexpected and so uniform.”
Still, Landry’s team rose to the challenge. “A lot of what we did was just do all the things that we wanted to do on an incredibly accelerated time frame, completely hobbled by health requirements and new ways of working together,” Landry says. Early in the pandemic, Amazon came under fire for not adequately protecting warehouse workers from COVID-19 and pressuring them to meet quotas. Landry says the health and safety of employees and customers alike were “top guiding principles” for Amazon from “absolute day one of the pandemic.”
At the start of the pandemic, grocery pickup was available at only 80 Whole Foods locations. Now the service is offered at every store in the country—more than 500 in total. And a pilot program that offered online delivery to customers who rely on the Supplemental Nutrition Assistance Program (formerly known as food stamps) to pay for groceries was expanded from two states to 46 states by the end of 2020.
In just over a year, Amazon’s trillion-dollar business has grown exponentially to meet the heightened demand for fulfillment and delivery services, hiring 500,000 new employees in 2020 and bringing its total head count to 1.3 million. (At the end of 2019, after a quarter with a record number of new subscribers, Amazon had 150 million Prime members; by April this year, that figure had jumped to more than 200 million.)
Amazon recently announced plans to hire another 75,000 workers into delivery and warehouse roles, with a $100 bonus for those who are already vaccinated; in some regions, the company is also dangling a $1,000 signing bonus for new employees. Amazon already has a $15 minimum wage but recently raised its hourly wages, following the high-profile union drive in Bessemer, Alabama, and a labor shortage coming out of the pandemic. The company has provided on-site vaccinations across 29 states, reaching about 300,000 frontline workers and contractors, and is offering up to an $80 bonus—$40 per shot—to employees who get fully vaccinated.
For disabled people and those who are immunocompromised or elderly, grocery delivery was a lifeline amid the pandemic. But as more Americans get vaccinated and the economy continues to open up, some people who opted into grocery delivery over the past year may want to return to physical stores or some combination of online and in-person shopping. Landry recognizes that in-store shopping remains far more common and expects that consumer behavior will change. That’s why Amazon is focused on an omnichannel approach to its grocery business.
“Our goal, from a grocery perspective, is to give customers the absolute best experience in terms of selection, price, quality, and convenience, no matter where they want to shop,” Landry says. “All those shopping experiences should support one another.”
Her team is already executing on that strategy. Amazon opened its first Amazon Fresh brick-and-mortar stores over the past year—with many more in the works, according to Bloomberg—and even stood up a Whole Foods fulfillment center in Brooklyn dedicated to online deliveries. “The last year has been very, very much dominated by: ‘Let’s just meet the needs of our customers and our employees,'” Landry says. “[But] to me, the blend of online and in-store is kind of the exciting space.”
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