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Jun 6

Amazon Roars into Fresh

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For now Amazon is keeping quiet, but Reuters reported Monday citing sources claiming that Amazon will be expanding the AmazonFresh service to Los Angeles this summer, with San Francisco and Dallas following by the end of the year. Up to twenty additional urban areas could be added in 2014, with a hint that some may be outside of the U.S.

Reuters quotes Bill Bishop, a prominent supermarket analyst and consultant, saying the company was targeting as many as 40 markets, without divulging how he knew of Amazon’s plans.

Like a patient lion Amazon has been experimenting and learning about how to do direct grocery delivery. Since 2007 AmazonFresh has been serving the Seattle metro area, offering a full range of  groceries including fresh produce, meat and dry goods, plus offerings and meals from local merchants. All deliveries are done by AmazonFresh’s own trucks and delivered with in a one-hour delivery window in insulated carriers.

Our coverage of the 2012 PMA Fresh Summit general session back in October revealed that Amazon was planning to open 30 new distribution centers with the intention of pushing AmazonFresh deep into the U.S. metro areas.

The implications of this move are wide. To start, it helps to understand that Amazon is not so much a retailer as they are a distribution and logistics expert with one of the oldest and most solid ecommerce businesses on the internet. Consumer trust of the site is very high. Once they have mastered the intricacies of managing fresh inventories (they obviously believe they have), the potential threat to grocery chains such as Kroger Co, Safeway Inc and Whole Foods Market, as well as general-merchandise retailers Wal-Mart Stores Inc and Target Corp, is obvious.

“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. That’s an awesomely scary prospect for the grocery business,” says Bishop, chief architect at Brick Meets Click, a consulting firm focused on retail technology.

Bradley Fitzhenry, MJR Creative Group

Bradley on Google+ |  twitter: @mjrcg |  Facebook: http://www.facebook.com/mjrcreativegroup

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