Amazon takes on Woolworths and Coles with new tech-driven grocery strategy in Australia

Amazon is taking on Woolworths and Coles with new tech-driven grocery strategy in Australia.

This new partnership with Harris Farm Markets offers the first real challenge to the major supermarkets' dominance in grocery delivery.

As these giants compete, the ultimate winners will be Aussie shoppers, who stand to benefit from better prices and more choice.

Customers in more than 80 postcodes across Sydney's Inner City, Inner West, and surrounding suburbs can now order Harris Farm Markets products via Amazon including same-day and next day deliveries.

While it's just in Sydney for now, Today Money Expert Joel Gibson told nine.com.au the partnership is being predicted to be "the beginning of something bigger".

"I suspect Amazon will look for other partners in other states to continue rolling out this model if it works," he said. "They're starting in Sydney, but they've got big ambitions for taking on the grocery giants."

Gibson said Amazon's "fastest-growing category" in Australia is "groceries, pantry goods, and nappies".

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Amazon's partnership with Harris Farm Markets signals the brand's entry into the fresh groceries space, and it's a clever one.

Harris Farm Markets, founded in 1971, is a highly respected, family-owned Australian retailer with over 30 stores in NSW and Queensland, and is renowned for its superior fresh produce, extensive cheese selection and community-focused ethos.

It has won multiple customer satisfaction awards including Most Trusted and Top Rated Produce.

Amazon Prime members will receive free shipping on Harris Farm Markets orders over $100, while non-Prime members will get free shipping on orders exceeding $200.

Orders below that threshold will be charged a flat $15 delivery fee.

Amazon Australia has invested heavily in improving its grocery options, by slashing prices and speeding up delivery times.

The expansion is backed by a $490 million investment in two new fulfillment centres opening in Horsley Park this year, where employees pick, pack, and ship customer orders.

"It's funny how the two sides are becoming closer to each other – Coles and Woolies are also building big fulfillment centers in the suburbs of Sydney and Melbourne to make their online delivery offering more efficient, cheaper, and more low cost," Gibson said.

He said this latest partnership is a "good thing for shoppers" because "competition is good".

Gibson said there has been some pushback against Amazon from some customers, who say that they want to support Australian businesses that have bricks and mortar stores and employ Australians.

This is similar to criticism faced by Aldi, which is German-owned.

But the common defense is that both Aldi and Amazon have made significant investments in Australia, contributing billions to the economy and creating thousands of jobs across retail, logistics, and technology sectors.

Gibson said Amazon will often "price match" with Coles and Woolworths "on any given week" in a bid to entice more customers to order groceries from them.

"So, definitely price competition is hotting up with Amazon coming into the mix and the fact that they're now offering food and veg means that some people will probably start doing their entire grocery shop on Amazon – that's good for competition too."

Coles and Woolworths have also improved their fast grocery delivery options.

These include Coles' exclusive partnership with Uber Eats and Woolworths' move to DoorDash.

Both supermarkets have also introduced more two-hour-and-under delivery and pick up options for customers using the supermarket's delivery services.

Australian consumer behaviour is moving towards faster grocery deliveries driven by a demand for speed and convenience, even if that speed and convenience comes with an additional delivery cost or in some instances, high prices for some products.

Gibson warns Aussie shoppers do "need to be strategic" when it comes to ensuring they are paying the lowest prices possible and continue to save while using fast grocery delivery services.

"You need to be careful because there are all sorts of fees, some hidden, some not so hidden – especially if you want your groceries delivered fast," he said, adding this is "becoming more complicated to work out" and tends to "favour big shoppers".

But ultimately, the partnership between Amazon and Harris Farm can only be good for consumers, introducing much-needed competition which will hopefully lead to some relief for Aussie shoppers at the checkout.

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