And why it's been so slow to expand.

By Michal Addady
May 24, 2016

Amazon’s amzn grocery service has been slow to expand since the online retailer began testing in 2007.

After a year and a half of not having launched in any new cities, Recode reports that AmazonFresh will be extended to Boston and the U.K. this year. AmazonFresh lets customers purchase groceries online, including perishable items like dairy, meat, and fish, which are delivered within a day.

The service is currently available in parts of California, New Jersey, New York City, Philadelphia, and Washington. Amazon had originally planned to launch in the U.K. last year, but some industry sources say that it was held up by a deal with British supermarket Morrisons.

As for its progression into other markets, there are more hurdles associated with AmazonFresh than the site’s other services that have slowed it down—the company needs to open refrigerated warehouses, carry its own stock of perishable groceries, and hire additional delivery people in each new market.

 

Keith Anderson, vice president at e-commerce analytics startup Profitero, says that each “local online grocery market is like a mini business unit” and, unlike Amazon’s other services, can’t be managed by people at headquarters. He added that it’s difficult to convince customers it’s worth the $299/year price tag.

Amazon is trying to grab a larger share of the grocery market with this expansion. Delivery services currently makes up less than 5% of all grocery sales.

Amazon could not immediately be reached for comment.

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