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Amazon has followed through on its plan to require a special $299/year membership to use the AmazonFresh grocery delivery service in Seattle and other cities — upping the ante and causing some frequent customers to say they’ll take their business elsewhere.

The rollout of the “Prime Fresh” membership requirement appears to be the conclusion, for now, of a longstanding effort by Amazon to figure out the economics of grocery delivery. The company started testing the service in Seattle eight years ago, expanding to other cities only over the past couple of years.

amazonfreshThe new $299/year requirement follows through on a plan that the company announced in December.

Later, Amazon delayed the rollout from June to the end of September and started experimenting with a two-tiered subscription model in California, allowing regular Amazon Prime members ($99/year) to use AmazonFresh, but with a delivery fee. (There’s no delivery fee on orders above $50 for the higher-level Prime Fresh members.)

The delays and experimentation stirred speculation that Amazon might be rethinking the $299/year subscription.

But the company has decided to go ahead with the Prime Fresh requirement. Customers in Seattle, New York City and Philadelphia are greeted with this message upon logging into their AmazonFresh accounts this weekend: “AmazonFresh is now available exclusively to Prime Fresh members.”

The message links to a page explaining that Prime Fresh offers “free AmazonFresh delivery on grocery orders over $50, plus all the benefits of Prime. Prime Fresh membership is available as an upgrade of Amazon Prime, which includes all the benefits of Prime plus access to AmazonFresh.”

It continues, “Prime Fresh is required to shop AmazonFresh. After your (30-day) free trial, you will be charged $299 for the next year and annually after that. Existing Prime customers who upgrade to Prime Fresh will be refunded for their Prime membership on a prorated basis.”screenshot_876

The sting is especially sharp for customers in the Seattle area, many of whom have been using AmazonFresh without an annual subscription fee since Amazon started testing the service in the region back in 2007.

Here’s a sampling of the reaction on Twitter today.

They have options. Several delivery services compete with AmazonFresh.

For example, Google Express charges $95/year or $10/month for a membership that provides free delivery except on cold grocery items.
photo-5Instacart charges $99/year for its Instacart Express membership, which provides free delivery on orders over $35. (Instacart also offers deliveries to non-members, with a delivery fee.)

Also competing in the market are delivery services from traditional grocery stores, such as Safeway.

Amazon is also competing with itself. The new Amazon Prime Now delivery service offers standard ($99/year) Prime members free two-hour delivery and $7.99 one-hour delivery on a wide variety of products, including some grocery items, although the selection is much more limited than it is on AmazonFresh.

Update: An Amazon representative confirms that $299/year subscription requirement applies to customers in California, as well, saying in an email, “We offered the $7.99 option to Prime customers in California for a limited time. Customers in California can sign up for Prime Fresh or a free 30-day trial of Prime Fresh in order to use the service.”

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