Five months after snapping up Whole Foods, Amazon is moving quickly into the grocery delivery space.
On Thursday, Amazon announced plans to offer Prime customers free two-hour delivery on Whole Foods goods in some locations, through Prime Now. In doing so, the company is allowing customers to purchase groceries from Whole Foods through the $12.99 a month Prime subscription—canceling the need for consumers to spend another $14.99 to access Amazon Fresh.
It’s yet another move on Amazon’s part to make its grocery segment more attractive to consumers. After acquiring Whole Foods in August, Amazon immediately announced plans to cut prices—giving the brick-and-mortar retailer with a reputation for selling expensive goods something of a boost. The news sent waves through the traditional grocery industry.
But while costs are going down for consumers, the pain is being felt by some of Whole Foods’ suppliers. According to the Wall Street Journal, the chain is asking its suppliers to pay more to feature their goods in the supermarket’s most visible shelving spaces. The move will affect most of Amazon’s suppliers, who currently pay an average of about $25,000 for the prime real estate. On top of that, Whole Foods is also asking suppliers with goods in highly-trafficked areas of the stores to offer greater discounts on their goods.
Most grocery stores, however, seem fairly unshaken by the news. Shares of Kroger (KR) dipped the most, about 4% in trading Thursday. Walmart (WMT) and Sprouts Farmers Market (SFM) each dipped roughly 2%, while Costco (COST) remained flat. In comparison, the S&P 500 dropped about 2%, with Amazon (AMZN) also sinking at roughly the same rate.