Aug 02 2007
Amazon gets fresh
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Amazon.com has today announced a new venture: AmazonFresh will be delivering fresh (and frozen and “shelf-stable”) foods, ordered online, to households in Seattle.
The foods available will include “highest-quality fresh fruits and vegetables” and a “leading assortment of natural, organic, and specialty brands”.
Some of the produce is described as “farm-fresh” but there’s no further information on its provenance, at least not to anyone without a by-invitation access code to start shopping. AmazonFresh follows Amazon’s rather quiet introduction of dry groceries to its product range last year.
This is a more innovative move in the US than it would have been in the UK, where most of the major supermarkets offer online shopping and delivery. PlanetRetail reports (citing the Food Marketing Institute) that just 6% of US shoppers have bought groceries online in the last year, whereas 80% have bought something online.
In the UK, Tesco alone now has online sales of over £1 billion to 850,000 active customers (detailed in Tesco’s 2007 Annual Review).
(Tesco proudly trumpets the green credentials of its online delivery service, cutting car journey’s with more efficient van deliveries to several households. Fair enough, but is this a tacit admission that the out-of-town supermarket model, still Tesco’s core business, is inherently unsustainable?)
The US has a number of standalone and store-based online grocery services, such as FreshDirect and Albertsons, but nothing like the UK. And there are plenty of failed on-line grocers from the first dotcom boom, not least Webvan, which subsumed Amazon-funded homegrocer.com before going bankrupt. Ironically, Webvan was founded by Louis Borders, founder of Borders bookstore.
Of course, home grocery delivery is nothing new and is still a service quietly offered - in the UK and the US - by many an unfashionable independent grocer.
So is AmazonFresh anything more than another established business moving into an underdeveloped market on its home turf?
It might even be considered appropriate retaliation for the move of grocers’ into non-food shopping. PlanetRetail suggests that Amazon might be in danger of spreading itself too thin, asking “Can organic bananas be sold alongside Harry Potter books and Prada handbags?” Well, UK supermarkets have had no trouble selling Harry Potter alongside organic bananas and handbags, though perhaps not quite Prada.
Ensight.org offers an alternative explanation. This is Amazon’s first venture not to rely on third-party distribution. Could Amazon be using groceries to fund a distribution network that will ultimately carry its core products?
