Cramer: Amazon's deeper push into grocery creates a 'new narrative' for the company

CNBC

4 days ago

CNBC's Jim Cramer said Thursday that Amazon 's deeper push into the grocery business is creating a "new narrative" for the company as it threatens to disrupt incumbents like Walmart . Amazon announced Wednesday that Prime members in more than 1,000 cities and towns can now get free same-day delivery on fresh groceries for orders over $25. The e-commerce and cloud giant plans to more than double that reach by year-end, with further expansion slated for 2026. Cramer called it the "Amazon factor" — suggesting the company's new push into same-day delivery of produce, dairy, and frozen food alongside household items helps solidify it as the ultimate one-stop shop for consumers. "You're going to get your food. You're going to get your drugs. It's going to come to your house," he said. "It's a whole new world and Amazon's got it." Wednesday's move, billed by Amazon as "one of the most significant grocery expansions" in its history, is seen by the market as a material escalation in the online grocery battle. Amazon stock advanced 1.4% on the announcement and was up another 1.9% on Thursday. Shares of Walmart and Target , which use their physical stores to service online orders of fresh groceries, were under pressure for a second straight session on Thursday. Delivery competitors fared much worse. Instacart and DoorDash were both down big again Thursday after sinking 11.5% and 3.8%, respectively, on Wednesday. Club stock Costco also faltered Wednesday but was steadier Thursday. Cramer said Wednesday Costco should never have been down on the Amazon news because the retailer is not in the same business. Costco is a "price business, a volume business," he said. Amazon has been able to expand its grocery offering because it keeps making same-day delivery more efficient. It has "reduced the average distance packages travel by 12% and lowered handling touches per unit by nearly 15%," said Amazon CEO Andy Jassy during the company's post-earnings conference call on July 31. Jassy cited strategic positioning of the company's fulfillment centers and the ability to send more items in each order, which resulted in fewer packages. "These improvements are making the network faster and structurally more efficient," the CEO added. That delivery speed has been driving customers to buy everyday items like cleaning supplies, vitamins, and personal care products online instead of making the trip to the grocery store. Last quarter, Everyday Essentials' growth outpaced the rest of the business globally and represented one out of every three units sold. By leveraging its large and loyal Prime customer base and increasingly efficient delivery speeds, it wouldn't be surprising if Amazon takes market share from top grocery players. At the same time, though, the impact across the industry may take time to unfold. We continue to maintain our buy-equivalent 1 rating on Amazon shares and a $250 price target. (Jim Cramer's Charitable Trust is long AMZN, COST. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.