Whole Foods

Why Amazon keeps spending big on grocery delivery

A man delivers a package to a door.
An Amazon Fresh delivery worker makes a stop. Photo: Smith Collection/Gado/Getty Images

Amazon is losing billions of dollars as it expands free, fast shipping. Still, the company keeps doubling down and debuting two-hour grocery delivery at zero cost to Prime members in new markets.

The big picture: The American food market is worth a whopping $700 billion, but that's not why Amazon is chasing it. Consumers shop for food more frequently than anything else, and Amazon is betting that getting people to visit its site whenever they need groceries will turn them into loyal, lucrative customers.

Expert Voices

What Amazon's shuttering pop-ups mean for the future of its stores

Amazon pop-up signs at the Queens Center Shopping Mall in New York
At the Queens Center Shopping Mall, in New York. Photo: Drew Angerer/Getty

When Amazon announced the closure of all 87 of its pop-up stores in the U.S., it seemed to signal a failed experiment, but temporary shops can be a proving ground to test different physical experiences and gather data.

Why it matters: The pop-ups likely gave Amazon's strategists proprietary data and insights as the company prepares to open more brick-and-mortar outlets like Amazon Books, Amazon 4-Star, and Amazon Go convenience stores.