The fee, which starts on deliveries after Aug. 30 in Boston, Chicago, Manchester, New Hampshire, Portland, Maine, and Providence, Rhode Island, is a pilot program that may help Whole Foods cover the cost of equipment, technology and delivery, Progressive Grocer reported. The fee would enable Whole Foods to avoid raising food prices. Grocery pickup will remain free.
“This service fee helps to cover operating costs, so we can continue to offer the same competitive everyday prices in-store and online at Whole Foods Market,” the company said in a notice sent to shoppers last week.
Amazon, which owns Whole Foods, has said their growing delivery business has increased costs. The retailer delivered three times as many grocery orders in 2020 compared to 2019, with consumers opting for bigger baskets per order. The e-commerce giant also said the $9.95 fee is on par with industry competitors.
The higher fee reveals that while grocery delivery remains an important part of retailers’ operations, the logistics of the service can be costly to businesses. Many grocery retailers rely on third-party delivery services, such as Instacart or DoorDash, to complete their delivery services to customers. In those cases, third-party vendors typically set their own delivery fees.