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US Internet Industry: What Alphabet, Facebook, Amazon Are Up To

PART:
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Part 7
US Internet Industry: What Alphabet, Facebook, Amazon Are Up To PART 7 OF 15

Amazon Taking Prime Now to Canada

Prime Now rollout in Vancouver and Toronto

Amazon (AMZN) is expanding its fast delivery service Prime Now to Canada. According to reports, Amazon intends to initially roll out the service in Toronto and Vancouver. The rollout is expected to begin later this year, with Vancouver first in line for a likely November rollout. Toronto may get Prime Now service in January 2018.

These two Prime Now rollouts will be on a pilot basis. If Amazon is impressed with the outcome of the pilot program, it will consider rolling out Prime Now more broadly in Canada later in 2018.

Amazon Taking Prime Now to Canada

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Is Prime Now going places?

Prime Now allows Amazon Prime shoppers to receive their orders within two hours. In Canada, Prime subscription costs $79 Canadian per year (about $63), compared to $99 in the United States (SPY). Amazon’s plan shows that Canada would soon join other countries such as the United Kingdom (EWU), Japan (EWJ), and Singapore with Prime Now service.

The planned launch of Prime Now in Canada is viewed as part of Amazon’s push into groceries, a segment of the retail business that has been slow to move online.

Eye on Canada’s grocery industry

According to Nielsen, about 1.9% (or $2.0 billion Canadian) of Canada’s $103.0 billion grocery spending was online in 2016. The firm predicts that 5.3% (or $6.0 billion Canadian) of Canada’s grocery spending will be online by 2020. The chart above shows the flow of Canada’s grocery spending to online.

Amazon’s grocery push in Canada will see it step up competition with Walmart (WMT) and Costco (COST) since these retailers operate Canadian subsidiaries.

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