AUSTIN, TX: Amazon’s relentless challenge to other retailers in the US has stepped up another gear with the news that the e-commerce giant plans to deliver groceries from Whole Foods Market via its fast-shipping Prime Now service.

Since its $13.7bn acquisition of specialist grocer Whole Foods last summer, Amazon has launched a number of initiatives, such as discounts and cross-selling, but the latest development is significant because it represents the first major integration of its new physical grocery chain with its e-commerce operations.

The online retailer announced in a statement that it is introducing free two-hour delivery of natural and organic products from Whole Foods Market through Prime Now. Amazon Prime members also have the option of one-hour delivery for $7.99 on orders of $35 or more.

For the moment, the new service is restricted to Austin, Texas – the home base of Whole Foods Market – as well as Dallas, Virginia Beach and Cincinnati in Ohio, but will be rolled out across the US later this year.

“We’re happy to bring our customers the convenience of free two-hour delivery through Prime Now and access to thousands of natural and organic groceries and locally sourced favourites,” said John Mackey, Whole Foods Market co-founder and CEO.

“Together, we have already lowered prices on many items, and this offering makes Prime customers’ lives even easier,” he added.

According to the Wall Street Journal, Amazon’s latest move is “one of the first to potentially take aim at major grocers racing to offer deliveries and pick-ups to better compete with Amazon”.

As well as Walmart and Kroger, these retailers include Sprouts Farmers Market, which already works with Amazon in some markets to offer fast delivery.

Stephenie Landry, the Amazon vice president in charge of the Prime Now express delivery service, confirmed to the Journal that Amazon’s partnership with Sprouts Farmers Market and other retailers would continue.

Sourced from Amazon, Wall Street Journal; additional content by WARC staff