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Amazon Fresh's Local Market Seller

Grocery delivery service
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Food & Beverage

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Launched in 2007, Amazon Fresh is a grocery delivery service that is available for Amazon Prime members. After its initial launch, the service gained traction in many cities of the United States and some cities all over the world.

The Local Market Seller program was a part of Amazon Fresh’s initiative to sell grocery products from third-party vendors. This gave customers the freedom to choose from thousands of goods including snacks, produce, meat, household items, and more. Customers could then have the items delivered to their doorstep much like Amazon’s other products.

Through the Local Market Seller, Amazon Fresh gave users the option to buy locally-sourced products along with Amazon Fresh’s own products.

Cause of Failure

In 2018, after many years of successful service, Amazon Fresh announced that it was cutting ties with all its local third-party vendors.

Despite the abrupt nature of the announcement, it came as no surprise as Amazon had recently purchased the American food giant ‘Whole Foods’ in 2017. The purchase of Whole Foods gave Amazon direct access to the same types of products that Amazon Fresh previously got from third party local sellers, presumably at higher cost. Moreover, Amazon started offering an under two-hour Whole Foods delivery for its Prime Now delivery, which basically offered the same services as Amazon Fresh (but with products from Whole Foods rather than local sellers) and made it obsolete. At that time, Amazon had also started focusing more on efficiency and increasing its control in the competitive grocery delivery market.

The Whole Foods acquisition was closely followed by the suspension of Amazon Fresh’s services in major cities including New York, New Jersey, and California. While no explanation was provided regarding the suspension, it was evident that it had something to do with Amazon’s efforts to expand its much faster Prime Now service in tandem with Whole Foods delivery.

However, shutting down the local vendor section must not have been a small sacrifice as it had been generating more than 1000 search hits on Amazon. Vendors were consoled by an email from Amazon telling them to look forward to new Amazon programs that would cater to local sellers. As the demand for local food continues to grow, hopefully Amazon will find a way to meet it through new channels that perform better than their Local Market Seller program.


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