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With the rollout of its Amazon Fresh online grocery ordering and home delivery service in Los Angeles over the past week, Amazon also is offering a new level of its Prime membership designed to drive frequent shopping.

On the Amazon Fresh website, the company says that "AmazonFresh is now available in the Los Angeles area in select zip codes as a free 90-day trial to Amazon Prime members. After your free 90-day trial, your membership will automatically upgrade from a Prime membership to a Prime Fresh membership and you will be charged $299 for the next year and annually after that. This includes all the benefits of Prime, plus access to AmazonFresh. Your current Prime membership will be refunded on a pro-rated basis when you upgrade to Prime Fresh."

Other features noted on the Amazon Fresh site:

• "Free Same-Day & Early Morning Delivery: Free delivery on orders over $35. Place your order by 10am and have it by dinner, or by 10pm and have it by breakfast."

• "Huge Selection, From Milk to Electronics: More than 500,000 everyday essentials, delivered at the time slot of your choice. What's on your list? Whether it's apples, shampoo, or a digital camera, we've got what you need to keep your household running smoothly."

• "Local Shops & Restaurants: We bring your city to your doorstep - from bakery to ethnic foods to gourmet meals. Order up fresh mahi-mahi from Santa Monica Seafood, a tasty rhubarb cream pie from The Pie Hole, or a crisp salad from Mediterranean City Grill."

• "Time-Saving Tools: Shop anytime, anywhere from our site or mobile apps. Save your lists, see your past purchases, and find one-click recipes, and get your shopping done in minutes."

Amazon is not offering the expanded Prime membership costs and benefits in Seattle, where it has been testing Fresh for several years. A spokesperson tells Reuters that it is a "new approach," developed because "the economics remain challenging. We will continue experimenting and innovating on behalf of our customers to find a model that works."
KC's View:
My friend Tom Furphy, who while at Amazon helped to develop the CPG and Fresh business models, tells me that "by reviewing the site, you can clearly see the strategy of combining fresh products, with local merchant selection and 500k of the top Amazon.com items.  All available for same day delivery.  Boom!"

I think he's right about that. While $299 at first seemed a little pricey, I do think that if I lived in LA I'd certainly be willing to take Amazon Fresh for a test drive, and if they lived up to the value proposition, that $299 annual fee (really only $220, because I've been paying the $79 Prime fee for years, and it has been a great investment) probably wouldn't seem that steep. And same day delivery, not just on Fresh items but also on so many of Amazon's traditional product lines? That strikes me as a game-changer ... especially because if I lived in LA, I'd probably be looking for ways to avoid the freeways, and getting Amazon to make the drive for me seems like a pretty good deal. (Let's do the math. A tank of gas easily costs between $50 and $60. The new Prime fee is the cost of about four tanks of gas. I'm not sure that people use four tanks of gas shopping for groceries in a year, but some might ... and starting to do these calculations might take some of the bite out of the $299 fee.)

The key is that Amazon is trying to change the game, as in ... "What once seemed wildly impractical is now completely normal, and normal just begs to be messed with."

I have no idea if this will work, be sustainable, and expandable around the country. But I do think that Amazon's willingness to challenge convention makes it a formidable competitor, that its efforts should not be taken lightly, and that history suggests that it will find ways to make Amazon Fresh work.