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DHL Is Now One of Amazon’s Grocery Delivery Partners

New electric cars for Bavarian mail serviceNew electric cars for Bavarian mail service
Electric cars of the mail service being charged in Paussau, Germany, 10 May 2016. Armin Weigel — picture-alliance/dpa/AP

Deutsche Post DHL won a contract to deliver groceries for Amazon’s AmazonFresh service in Germany, which could help ease concerns that the U.S. retailer’s own delivery services are an increasing threat to the German logistics group.

“We want to be the service provider for online grocery sales,” Deutsche Post Chief Executive Frank Appel told shareholders at the group’s annual general meeting on Friday.

Amazon (AMZN) declined to comment.

People close to the matter told Reuters last month about the deal with Deutsche Post, which already delivers packages for Amazon in Germany.

Deliveries of packages from goods bought online via websites such as Amazon and Zalando has been booming in Germany, helping to boost profits at Deutsche Post, even as Amazon has been developing its own logistics capabilities in other countries.

In Germany, Amazon’s second-biggest market, grocery e-commerce has been slow to take off because the country has a high density of food stores and the dominant discounters Aldi and Lidl have been slow to go online.

But REWE, the country’s second-biggest supermarket chain, has been investing heavily in e-commerce in anticipation of Amazon’s move into food.

Amazon launched fresh food delivery services in Seattle in 2007 and has since expanded to a handful of other U.S. cities. Last year it started the service in London.

Deutsche Post also has its own online supermarket, Allyouneed Fresh, which Appel said on Friday the group planned to continue operating.

Management consulting firm A.T. Kearney expects e-commerce will account for 3% of Germany’s grocery market by 2020, up from just 1% now.