Amazon loves its Fresh grocery service, calls it a 'key part' of the business

Amazon is happy with the progress of its Amazon Fresh grocery service, and believes groceries will continue to play an important role going forward.

Amazon Fresh is a grocery delivery service that costs $14.99 a month, only available to Prime members (which costs another $99/year). Although it launched nearly a decade ago, Amazon Fresh only started to gain traction in 2013, and is now available in 18 markets worldwide.

"We continue to believe consumables and groceries are a key part of the offer to our customers," Amazon CFO Brian Olsavsky said during Thursday's earnings call. "We're finding it a very attractive service."

Olsavsky's comments come just a day after Business Insider reported Amazon sees room for up to 2,000 physical grocery pick-up spots or brick-and-mortar stores in the US. There have also been multiple reports hinting at Amazon's broader grocery store ambitions.

He declined to comment on any of the reports, but did acknowledge the company's testing many different models in the space, including the one-hour Prime Now delivery service and Prime Pantry for everyday essentials.

"We are playing with very different models to see which works and for what needs," he said.

Olsavsky also noted the effectiveness of the new Amazon bookstores, pop-up stores, and college pick-up points in driving more customers to Amazon, indicating it sees the physical storefront as an important part of its future.

But if Amazon wants to become a bigger player in the grocery space, it may have to move fast. According to a recent note by Cowen & Co., Amazon still has a long way to go to catch up bigger players like Walmart and Target in the groceries and consumables category.

"Given the lower penetration at Amazon (~17% in September '16) compared to Walmart (~53%) and Target (~45%), we believe Amazon has a long runway to grow Grocery and Consumable Purchasers over time," Cowen wrote in the note.

Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.