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Amazon introduces grocery service for Prime members at flat $5.99 rate

NEW YORK, N.Y. - Amazon is taking aim at grocery stores and discounters like Wal-Mart with a grocery service that lets its Prime loyalty club members fill up to a 45-pound box with groceries and get it shipped for a flat rate of $5.99.

The mega online retailer says the service, called Prime Pantry, will offer Prime users an expanded selection of items that they usually pick up in grocery stores, in addition to larger in-bulk groceries more commonly ordered online, at competitive prices. Some items now available are single boxes of Cheerios, a six-pack of Bounty paper towels and Coca-Cola fridge packs.

Amazon calls the offerings "low-priced, everyday essentials in everyday sizes."

When Prime members shop through Prime Pantry, it shows how much space each item takes up in the grocery box, and how much room is left. Items are shipped within one to four business days.

The move comes as Amazon has been bulking up services for its Prime membership program, since it increased the annual membership price to $99 from $79 in March to help offset rising shipping costs. In addition to free two-day shipping, the service includes free access to Amazon Instant Video, a streaming video service that will include some HBO programming beginning in May.

The move is an "important development in Amazon's aggressive push into consumables," said Sanford Bernstein analyst Carlos Kirjner said. The Seattle company has also been testing Prime Fresh, a grocery delivery service, in several cities.

Shares of Amazon, which reports first quarter results after the market closes on Thursday, rose 3.3 per cent, or $10.76, to $335.34. After hitting an all-time high Jan. 22, the stock has retreated about 20 per cent.

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