Amazon has been in the news recently for their CEO Jeff Benzos becoming the 2nd richest person in the world, and now they’re in the news again but for a completely different reason. Amazon latest experiment is a grocery pick-up store , that’s right Amazon is going into the $600 billion U.S. market of groceries. As stated in the article,
On Tuesday the e-commerce giant unveiled two grocery pickup spots in Seattle’s Sodo and Ballard neighborhoods, under the AmazonFresh brand.
To explain what this new venture for Amazon is, the article notes that,
Dubbed AmazonFresh Pickup, the two locations are designed for shoppers who make their purchases online and then select a time to pick them up. An Amazon employee at the pickup site will bring the bags directly to the shopper’s car.
Now onto the specifics of the pricing for AmazonFresh and the planned services. AmazonFresh has said that when the stores open for the public that,
…they’ll be exclusively for members of Amazon’s $99-a-year Prime loyalty program.
Unlike the AmazonFresh delivery service, which costs $14.99 a month, usage of the pickup locations is free with no minimum order. Orders can be picked up two hours after purchase.
The one perk of being a AmazonFresh members is that you can pick up your purchases in 15 minutes . Amazon has also unveiled a pilot convenience store, where you are able to shop without having to use a cashier. Everything is paid for through your phone and a connection to Amazon`s system via wireless. The pickup and delivery service that AmazonFresh has introduced is intended to compliment the brick-and-mortar convenience stores.
Promotional Video:
Source:
Amazon Unveils Grocery Pickup Locations
Questions:
1. With Amazon's increasing online popularity, do you believe that this new venture could realistically work?
2. Does the idea of grocery pickup and delivery services interest you?
I really wonder how successful their pick-up grocery business will be. My understanding is that they will be physically small, which limits what they can offer. Whereas a normal supermarket has 50 different types of bread, ice-cream, or chips, the Amazon locations will have room for 2-3.
I think the incapacity to have much variety is going to hurt them. If they ran this out of larger fulfillment centers with more options I think it would be very successful.
I know that they plan to make a superstore but one where you walk in, buy your food and walk out. Although I'm not sure how big the AmazonFresh delivery buildings will be, they should be sufficient?. Either way, I too am curious how this new venture will go.
To your point on offering many different brands, they may employ the Costco model where they only offer one brand of peanut butter and one brand of detergent, etc. It gives them more buying power, maybe that is the logic to boost margins in a historically low margin industry?
I love Amazon fresh, but I'm curious why they are going into an old school, low margin, brick and mortar business. Personally, I won't use them as there are a bunch of high end stores I can walk to. I use them for delivery and convenience.
Maybe this is a volume play to help their fresh business? Really don't see the point other than continually going into new business for the sake of showing growth.
It wasn't mentioned but I think this is just to target a niche market. As well as to maybe compliment or create a sort of family of services revolving around groceries?. Not quite sure but I'm interested to find out, personally I never know what I want so this doesn't interest me.
This is how I function personally: I went to the supermarket today to buy bacon. I came out with parmesan, pecorino, pasta, candy, carrot & ginger juice and bacon.
We all know that the essentials are in the back of the store and the stuff we "dont really need" but still buy are nearer the cash registers and/or entrance. I fall for it all the time, though I do like to go into a supermarket and allow myself to be inspired. As I see very few people with grocery lists these days, I feel that segment with people who always know in advance exactly what they need - down to the brand - in their kitchen is quite slim. The potential lies in making the shopping experience as entertaining as possible with having aesthetically pleasing product placement etc. to keep shoppers inside the store.
It might work for families with two working parents. I think standardizing food is more common in those instances.
As for the hard-working individuals who cannot find time to go grocery shopping at all, they don't have time to cook either. In this case, Amazon is competing with IB worker Jeff's favourite burger joint.. good luck with that.
Grocery delivery is not that great - imagine having 4 boxes sitting at your garage for a day or two after they were delivered. However, I love Walmart's grocery pick up. Pull up and they throw the groceries in your car and an hour or two worth of shopping is done in 15 minutes. We have had one issue when they didn't notify us that the order was ready so we just had to call to confirm it was done at pick up time. If Amazon can have the same selection and reduce the amount of time between order and pick up I would gladly try them.
Actually, the promotional video that's linked in the post shows exactly what you described. You order from an app, and you're notified when they're ready and an ETA. Then you pull into the building and there is a employee waiting to place the groceries in your car. I'm not too sure about the selection, but they do have more or less the same concept as Wal-Mart. They're just banking on the fact that their online presence is quite popular with more tech-savy youth.
If they sell Asian ingredients they got themselves another Prime member!
Amazon is also making a move by opening up brick and mortar for book shops despite the industry struggling (Borders bankruptcy, Barnes and Nobles closing shops)(http://www.bizjournals.com/boston/news/2017/02/28/inside-amazons-first-…).
Pretty ironic that everyone thinks the market trend is going to ecommerce, but the largest ecommerce company is making moves on brick and mortar.
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