Amazon Just Made a Startling Competitive Move Against Kroger

For the last four years, I've gladly called the Sunshine State my home. And during my time here in Florida, I've seen my fair share of delivery trucks from grocery chain Kroger (KR -1.62%) -- they're everywhere. But the odd thing is that I've never seen a Kroger store.

In fact, Kroger doesn't have stores in Florida. But it's built a sizable business here nevertheless, through e-commerce and a logistics network to support same-day deliveries. It's an impressive feat. And e-commerce titan Amazon (AMZN -1.70%) just decided that if Kroger can do that, then it can do it too.

On Sept. 18, Amazon and Winn-Dixie -- a grocery chain owned by Southeastern Grocers -- announced a partnership for select Florida markets. Shoppers can go on Amazon and order groceries from Winn-Dixie and have them delivered that same day, just as they can from Kroger.

Here's why this could be bigger news than many investors realize.

Amazon's startling move in Florida

Amazon's foray into groceries started a long time ago. In 2017, the company acquired Whole Foods for almost $14 billion. And since then, it's experimented with other grocery concepts such as Amazon Go and Amazon Fresh. It doesn't break out grocery numbers per se, but in the second quarter of 2025, Amazon reported revenue of $5.6 billion for its physical stores.

I believe it's safe to say that grocery sales haven't exactly been a material driver for Amazon's business. Many investors forget it even has a grocery business. (Amazon owns a lot of businesses that investors might forget about.)

When it comes to running a grocery business, few, if any, do it better than Kroger. It's a top company when it comes to brick-and-mortar grocery sales. But it's increasingly thriving in e-commerce as well; it generated more than $14 billion in e-commerce revenue in 2024. And its e-commerce revenue was up by 16% in the second quarter of 2025, compared with less than 1% growth for the business as a whole.

When a brick-and-mortar business such as Kroger succeeds in e-commerce, that undoubtedly turns heads at Amazon. And this almost certainly motivated Amazon's decision to partner with Winn-Dixie. Amazon can get up and running with grocery e-commerce in short order, coupling Winn-Dixie's products with its own logistics infrastructure.

What this means for investors

Kroger is one of the largest grocery chains in the world, and there's high consumer demand for its grocery delivery model. Enormous chains such as Walmart and Target have already dipped their toes into the grocery e-commerce market. And now the largest e-commerce company, Amazon, is climbing aboard.

With all the biggest players doing it, I believe this is where the industry is headed. Smaller grocery chains, or chains that are too slow to notice the trend, risk losing market share to these larger players. And some grocery companies simply won't have the delivery infrastructure to make it work.

It's also worth noting that shares of Instacart (CART 1.78%) sold off hard on the news of Amazon and Winn-Dixie's partnership. After all, Instacart's business model is third-party grocery delivery. If the large players do delivery on their own and they take market share from smaller companies, that's likely to leave Instacart with less opportunity.

It's fair to wonder about Instacart stock (officially, Maplebear stock). If shoppers stay loyal to their favorite grocery store and that store has its own delivery services, then that won't be good for Instacart. But I think fears are premature.

I think the real takeaway is that the world's largest e-commerce company is taking a play from Kroger's book when it comes to groceries. This could be a watershed moment in which Amazon pushes this model in more markets, consumer habits change with familiarity, and all other chains in the space are forced to adapt.

Considering that Amazon is valued at $2.5 trillion and has generated $670 billion in trailing-12-month revenue, its partnership with Winn-Dixie likely won't move the needle on its own business. But it could be something that begins to profoundly change the grocery landscape, which is why this is news that investors should monitor.