Amazon is one of the world’s biggest commercial driving forces. It’s where you can buy everything, from – this is where I would normally list a load of varied products, but you all know what you can get at Amazon, we all use it. But one market that the etailer hasn’t been able to supplant so far, is online groceries. With AmazonFresh however, that could be all about to change.
While Amazon might find it difficult to muscle in on the lucrative, but low margin sector, it’s thought that by combining postage for expensive and heavy items, like electronics, with your shopping, it could maintain a competitive edge over contemporary supermarket services.
Amazon has been trialing food delivery for a while now in its native Seattle, but the plan is to expand this into 20 other areas, beginning with San Francisco’s Bay Area and Los Angeles later this year.
Reuters spoke about the potential for this business venture with an analyst from consulting firm, Brick Meets Click. He said: “Amazon has been testing this for years and now it’s time for them to harvest what they’ve learned by expanding outside Seattle.”
“The fear is that grocery is a loss leader and Amazon will make a profit on sales of other products ordered online at the same time,” he said. “That’s an awesomely scary prospect for the grocery business.”
Selling food at a loss, could be a real winner for Amazon. However, even turning a small profit, has the potential to generate billions for the retailer, as in the US alone, nearly $600 billion is made each year from food delivery.
However it’s not the only company looking to stick its nose in; Walmart is right behind it and plenty more firms besides. Once these companies figure out a decent, affordable same-day delivery service too, the whole game could change.
KitGuru Says: I gotta say, not a huge Amazon fan considering the way it tends to treat its workforce, but if it can help lower the cost of food, I would appreciate it. Seems like my weekly shop has doubled in cost over the past few years.