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TheStreet Open House

Amazon Unveils Prime Pantry Online Grocery Store

NEW YORK (TheStreet) -- Amazon (AMZN - Get Report) unveiled its brand new online grocery shopping service, known as Prime Pantry, which Amazon describes as a place to take advantage of "Low-priced essentials in everyday sizes, delivered to your home."

Amazon shares were gaining 1.65% to $329.95 in early New York trading.

Amazon Prime Pantry, which is It's only available to Amazon Prime subscribers, is designed to sell you popular household items - everything from paper towels to pasta, tomato juice to corn flakes and Coca-Cola to laundry detergent and vitamins to dog food. What's not on the list are perishables such as fresh milk, bread, meat, fish, fruits, vegetables or frozen foods, at least not yet anyway.

As Amazon seeks to grow, the phrase "in everyday sizes" plays a part. It's a dig at big warehouse stores, such as Costco (COST), where you have to buy 6 dozen rolls of toilet tissue or a few dozen frozen waffles at a time. Prime Pantry says it offers its shoppers "a wide range of products, including heavy and bulky items, all in popular pack sizes that are all cost prohibitive to ship for free." 

Usually, smaller sized packages actually cost more per-serving than super-sized packages of the same food as offered in warehouse stores and discount retailers. Amazon's Prime Pantry prices could be competitive with those big box stores.

Amazon is charging $5.99 for each 45-pound shipping box - not the usual free, two-day shipping Amazon Prime subscribers are accustomed to.

Amazon describes the Pantry packing and shopping experience like this:

"Adding your first Prime Pantry item to Cart starts a Prime Pantry box. As you shop, you see that each Pantry item tells you what percentage of a Pantry box it fills based on its size and weight. Pantry boxes are large and can hold up to 45 pounds or four cubic feet of household products. As you check items off your list, we continuously track and show you how full your box is."

$6 for each box box seems like a fair price for shipping. But, when you think about it even smaller, non-warehouse-sized liquid items such as soda, or bottled water or 100-ounce containers of laundry detergent or any combination of heavy items could reach the 45-pound weight limit very quickly. On the other hand, a box full of bulky, lightweight items such as paper towels and potato chips could present the opposite problem. Hopefully, Amazon's online pantry's ordering system will be able to help to pack the boxes accordingly.

As for the items not yet available in the Pantry, at some point in the future expect Amazon to combine this new service with its AmazonFresh grocery deliveries. As that service expands to additional markets (currently it's only available in Seattle, Los Angeles and San Francisco) it could an outlet for quick, same-day delivery of fresh and frozen items to Prime Pantry customers.

Those bulky, 45-pound boxes could be a problem for Amazon's promise of future delivery by aerial drones.

-- Written by Gary Krakow in New York.

To submit a news tip, send an email to tips@thestreet.com.

Gary Krakow is TheStreet's Senior Technology Correspondent.

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