Amazon expenses supply charges for contemporary grocery orders below $150

Brendan McDermid | Reuters

Amazon will charge delivery fees for fresh grocery orders of less than $150, which will help keep prices of its services low.

Beginning February 28, Prime members who request home delivery from Amazon Fresh will be charged a delivery fee of $9.95 for orders under $50, while orders between $50 and $100 will be charged a delivery fee of $6.95 and a $3.95 delivery fee applies to orders between $100 and $150, the company said in a note to customers viewed by CNBC. Only Prime members can use the delivery service, although anyone can shop at an Amazon Fresh grocery store.

Amazon previously guaranteed members of its $139-year Prime service free shipping on fresh orders over $35.

“This service fee will help keep prices low in our online and physical grocery stores as we better recover the cost of grocery delivery and continue to provide a consistent, fast, and high-quality delivery experience,” the statement said.

The move comes as Amazon CEO Andy Jassy launched a wide-ranging review of the company’s spending amid declining sales and a deteriorating economic outlook. Amazon has envisaged laying off 18,000 employees, frozen hiring of its corporate workforce, and paused or canceled some projects like a walkway robot and a telehealth service.

Amazon previously recalibrated its approach to online grocery delivery, a business that’s notoriously challenging from a cost and efficiency standpoint. In 2021, Amazon Prime members added a $10 service fee for Whole Foods delivery orders, having previously offered them at no extra charge.

LOOK AT: How Whole Foods has changed in the five years since it was acquired by Amazon

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