Amazon Is Working On A Plan To Deliver Your Groceries(businessinsider.com)
businessinsider.com
Amazon Is Working On A Plan To Deliver Your Groceries
http://www.businessinsider.com/amazon-and-grocery-delivery-2013-5
22 comments
I don't want to be that guy who points out minutia, but the title alludes to a news event that isn't true. Bezos clearly states in the article that Amazon has "not yet figured out the grocery model," but the title makes it seem like it's rolling out outside of Seattle.
I was at that shareholder meeting, and Bezos was answering a question about the future of Amazon Fresh asked by the only other person under 30 in the room of 100.
Bezos didn't make any pronouncements with his response. Instead he praised the Amazon Fresh business so far, disclaimed progress against inherent difficulties in that market, and said out loud that he continues to believe in the business and management. There was nothing else to get out of his answer, and any reporter or other 'source' reading into that quote is speculating.
For context, Bezos also said he is optimistic about AmazonLocal and said similar positive statements when asked by an elderly woman who uses the service. I happen to know that the team supporting Amazon Local is much, much smaller than it was a couple years ago. Reducing headcount isn't what I would call optimistic, but Bezos was doing the right thing and saying positive platitudes at the shareholder meeting.
Two other people asked Jeff to comment on political issues -- one on the prohibition of selling gun parts, and another on selling violent video games. I almost feel bad for the man having to deal with that nonsense.
Amazon may very well be rolling out Amazon Fresh elsewhere or using the same infrastructure for same-day -- who knows -- but Jeff certainly didn't make any announcement or hint at the shareholder meeting.
Bezos didn't make any pronouncements with his response. Instead he praised the Amazon Fresh business so far, disclaimed progress against inherent difficulties in that market, and said out loud that he continues to believe in the business and management. There was nothing else to get out of his answer, and any reporter or other 'source' reading into that quote is speculating.
For context, Bezos also said he is optimistic about AmazonLocal and said similar positive statements when asked by an elderly woman who uses the service. I happen to know that the team supporting Amazon Local is much, much smaller than it was a couple years ago. Reducing headcount isn't what I would call optimistic, but Bezos was doing the right thing and saying positive platitudes at the shareholder meeting.
Two other people asked Jeff to comment on political issues -- one on the prohibition of selling gun parts, and another on selling violent video games. I almost feel bad for the man having to deal with that nonsense.
Amazon may very well be rolling out Amazon Fresh elsewhere or using the same infrastructure for same-day -- who knows -- but Jeff certainly didn't make any announcement or hint at the shareholder meeting.
you should see the mini flare-ups of criticism Square gets on their Facebook posts after they recently banned using the service to sell gun parts.
As someone who lives in Seattle and has used Amazon Fresh, I actually prefer to go to the grocery store for most things. Items like produce are almost always not the best of quality, even though they have a quality ranking system. I've found that it is not worth it to purchase produce.
There is also the lack of browsing on amazon. I am fine with that for almost all other items, but something about food makes me want to walk the aisles and find food that sounds good. I do love cooking, so I might be in the minority in that regard.
I would rather walk a third of a mile to a real grocery store. That is mainly because of the produce and meats which is the bulk of my purchases. The rest of the stuff, cleaning supplies and such, I order through prime and get them in 2 days. Otherwise I would have to pay a delivery fee or meet a minimum order amount for free delivery.
There is also the lack of browsing on amazon. I am fine with that for almost all other items, but something about food makes me want to walk the aisles and find food that sounds good. I do love cooking, so I might be in the minority in that regard.
I would rather walk a third of a mile to a real grocery store. That is mainly because of the produce and meats which is the bulk of my purchases. The rest of the stuff, cleaning supplies and such, I order through prime and get them in 2 days. Otherwise I would have to pay a delivery fee or meet a minimum order amount for free delivery.
Amusingly enough, I've had the exact opposite experience. I would much rather use Amazon Fresh than go to a traditional grocery store. Fresh will bring items from Amazon's local delivery service and from other local businesses around Seattle and, in my experience, has been better for produce and meats than the Fred Meyer near me. Some neighborhoods of Seattle (and the suburbs) have walkable access to PCC, or Whole Foods, or Trader Joes; sadly, Lake City seems to be left out of that for now. That, I think, is the best part of Amazon Fresh's promise: even if you're not able to walk to a market with a wider selection, one will come directly to you for a nominal price.
For produce you might look into local farms. Some have great subscription delivery services; some go the CSA route and require a little more work on your end.
I (in California) use farmfreshtoyou.com, which is subscription delivery from a local organic farm, and they're great. Your area should have similar offerings -- check out localharvest.org if you're interested.
I (in California) use farmfreshtoyou.com, which is subscription delivery from a local organic farm, and they're great. Your area should have similar offerings -- check out localharvest.org if you're interested.
Interesting. Slightly OT, but my family started using FreshDirect in NYC when we had our second child. Figured we'd use it to get through those tough first few months, exhaust our "free delivery" phase, and be done with it. But what's kept us customers is that the produce quality somehow is consistently better than what we can get at most of our local markets (or on par with the upscale / expensive ones).
I can't figure out why they're doing this themselves and not partnering up with the smaller local and regional grocery stores that are getting clobbered by the Wal-Mart supercenters. Like 1800 Flowers does. I order, the local place gets my order, the convenience fee goes to the middlemen, and I can be lazy.
I know there were failed startups that did this in the past, but you'd think Amazon could figure out ways to make it work. It has to be better than rolling their own.
I know there were failed startups that did this in the past, but you'd think Amazon could figure out ways to make it work. It has to be better than rolling their own.
I work for a grocery delivery company in the UK who deliver from a central warehouse. Some reasons include:
1. If you pick in a store, the picker might find things that are out of stock because walk-in customers have brought them. This means items missing or substituted, which customers don't like.
2. Most people have a way they do grocery shopping already (like driving to wal-mart) and you have to compete with that. People won't pay a big convenience fee. That means you need economies of scale, you need a low cost-per-pick and you need to drive down waste.
(People don't seem to factor the cost of their time or petrol into the cost of grocery shopping. I've seen people who earn $100 an hour but who don't want to pay $10 to save themselves an hour of grocery shopping.)
3. You need a big range. Many customers do one main weekly shop and a smaller 'top up shop'. If your range doesn't have everything they want for their main shop, they'll be driving to wal-mart for those scented candles anyway so wal-mart will get their entire main shop.
1. If you pick in a store, the picker might find things that are out of stock because walk-in customers have brought them. This means items missing or substituted, which customers don't like.
2. Most people have a way they do grocery shopping already (like driving to wal-mart) and you have to compete with that. People won't pay a big convenience fee. That means you need economies of scale, you need a low cost-per-pick and you need to drive down waste.
(People don't seem to factor the cost of their time or petrol into the cost of grocery shopping. I've seen people who earn $100 an hour but who don't want to pay $10 to save themselves an hour of grocery shopping.)
3. You need a big range. Many customers do one main weekly shop and a smaller 'top up shop'. If your range doesn't have everything they want for their main shop, they'll be driving to wal-mart for those scented candles anyway so wal-mart will get their entire main shop.
I have all these problems with Safeway Delivery and Google Shopping Express (which doesn't do groceries unfortunately).
I still swear by those services. They save hours of my or my wife's time every week. We value our time highly.
This is a highly profitable (and growing) niche but one that can support multiple vendors and local stores.
I still swear by those services. They save hours of my or my wife's time every week. We value our time highly.
This is a highly profitable (and growing) niche but one that can support multiple vendors and local stores.
In addition to the other two responses, you have to remember that Amazon is not in the last leg of the delivery business. By last leg, I mean their logistics system covers large parts of the supply chain all the way up to the part of the chain that actually brings the product to the consumer. However, for the last leg of the supply chain, they leave it to UPS/Post Office etc.
Because of this, Amazon has few resources that make sense for partnering up w/ smaller and local regional grocery stores. These stores have independent supply chains are warehouses. This is where Amazon has expertise and advantages. If Amazon teamed up with them, then they would have to rely on the store's existing supply chain logistics and infrastructure, rather than use any of Amazon's advantages.
This means if Amazon were to actually add anything besides a website and the brand name, they would have to either 1) delve into the actual home delivery business, something they do not have any expertise in as they currently outsource it to other postal companies, or 2) they would have to undertake some sort of join venture to restructure the grocery stores supply chain (thus defeating the point of trying to take advantage of the grocery store's incumbent advantages).
Thus, unless Amazon makes a big effort to expand its business by building a warehouse to doorsteps delivery system, or undertakes rebuilding the grocer's supply chain, the only thing Amazon gets out of partnering with a grocery store is running the risk that the grocer may tarnish Amazon's name with shoddy service / products.
If anything, I think it would be smarter for Amazon to just buy a smaller local / regional grocery chain in a heterogeneous market. The ideal would be to buy a lower end grocer like a piggly wiggly in a market that also supports higher end grocers. You continue operating the Piggly Wiggle/low end grocer under the same brand name and don't even publicize the fact that Amazon owns and operates it. You then slowly switch over the logistics & infrastructure / supply chain supporting the low end Piggly Wiggly to work w/ Amazon's existing supply chain / warehouses & anything new that Amazon has to build to develop its grocery service. You then launch the Amazon Delivery service which has it's own branding but relies on the same back end/logistics that Piggly Wiggly is running on. This means that Amazon's logistics for the Piggly Wiggly brick and mortar stores are subsidizing the costs of the infrastructure for the Amazon Online Grocer while Amazon works on building up the online customer base needed to justify the cost of running an online grocer. Additionally, I assume there is a small overlap between shoppers at lower end grocer's like Piggly Wiggly (Sorry I keep picking on Piggly Wiggly), and consumers who want online grocer services. This means that Amazon won't be cannibalizing much of the brick and mortar business by pressing the online store because they will probably be different customers. Amazon could further help target different customers by opening up the Online store in zip codes that have few to no Piggly Wiggly shoppers. This means that Amazon is basically opening up a virtual grocery store in an area that would normally reject the Piggly Wiggly brand but still uses the same warehouses/supply chain to deliver the goods to the consumer.
Because of this, Amazon has few resources that make sense for partnering up w/ smaller and local regional grocery stores. These stores have independent supply chains are warehouses. This is where Amazon has expertise and advantages. If Amazon teamed up with them, then they would have to rely on the store's existing supply chain logistics and infrastructure, rather than use any of Amazon's advantages.
This means if Amazon were to actually add anything besides a website and the brand name, they would have to either 1) delve into the actual home delivery business, something they do not have any expertise in as they currently outsource it to other postal companies, or 2) they would have to undertake some sort of join venture to restructure the grocery stores supply chain (thus defeating the point of trying to take advantage of the grocery store's incumbent advantages).
Thus, unless Amazon makes a big effort to expand its business by building a warehouse to doorsteps delivery system, or undertakes rebuilding the grocer's supply chain, the only thing Amazon gets out of partnering with a grocery store is running the risk that the grocer may tarnish Amazon's name with shoddy service / products.
If anything, I think it would be smarter for Amazon to just buy a smaller local / regional grocery chain in a heterogeneous market. The ideal would be to buy a lower end grocer like a piggly wiggly in a market that also supports higher end grocers. You continue operating the Piggly Wiggle/low end grocer under the same brand name and don't even publicize the fact that Amazon owns and operates it. You then slowly switch over the logistics & infrastructure / supply chain supporting the low end Piggly Wiggly to work w/ Amazon's existing supply chain / warehouses & anything new that Amazon has to build to develop its grocery service. You then launch the Amazon Delivery service which has it's own branding but relies on the same back end/logistics that Piggly Wiggly is running on. This means that Amazon's logistics for the Piggly Wiggly brick and mortar stores are subsidizing the costs of the infrastructure for the Amazon Online Grocer while Amazon works on building up the online customer base needed to justify the cost of running an online grocer. Additionally, I assume there is a small overlap between shoppers at lower end grocer's like Piggly Wiggly (Sorry I keep picking on Piggly Wiggly), and consumers who want online grocer services. This means that Amazon won't be cannibalizing much of the brick and mortar business by pressing the online store because they will probably be different customers. Amazon could further help target different customers by opening up the Online store in zip codes that have few to no Piggly Wiggly shoppers. This means that Amazon is basically opening up a virtual grocery store in an area that would normally reject the Piggly Wiggly brand but still uses the same warehouses/supply chain to deliver the goods to the consumer.
That would be a nightmare for them. You can't control the service or quality that is performed under your brand name. And how would you keep track of the inventory available at each grocer? They are not identical. And, grocery stores aren't going to pick-and-deliver small orders to individuals with no added incentive. They would need a hefty delivery fee to make it worth their while. I can't think of any reason to go with this approach.
It is still a problem to be solved because if you buy an iPad on Amazon, you know what you will get. If you buy a potato, it is a different shaped thing every time. -> higher chance of dissatisfaction
I don't think it's that big of a problem. In the UK all the major supermarket retailers do home deliveries and I've used the services for 4 years.
The produce that quickly goes out of date usually has a message on the website telling you the minimum time it will last for (e.g. 2+ - they won't deliver something that will go out of date in else than 2 days).
If items you want are not in stock they substitue but give you the option of refusing the substitute and taking a refund instead. If the substitute is more expensive they will give you it at the cost of the item you actually wanted.
In the last 4 years I can't think of one bad experience other than a driver being late because he broke down once.
The produce that quickly goes out of date usually has a message on the website telling you the minimum time it will last for (e.g. 2+ - they won't deliver something that will go out of date in else than 2 days).
If items you want are not in stock they substitue but give you the option of refusing the substitute and taking a refund instead. If the substitute is more expensive they will give you it at the cost of the item you actually wanted.
In the last 4 years I can't think of one bad experience other than a driver being late because he broke down once.
Having sources in Amazon, I can tell you the goal here is not simply to deliver Groceries but rather to find a way to remove FedEx / UPS / etc from their cost of goods sold.
The economics of Fresh are very poor for Amazon and likely will always remain so, unless they can start to leverage it for same day shipping of the rest of their product line.
It's not something Amazon likes to discuss too much as it has the potential to upset their partners significantly in this space.
The economics of Fresh are very poor for Amazon and likely will always remain so, unless they can start to leverage it for same day shipping of the rest of their product line.
It's not something Amazon likes to discuss too much as it has the potential to upset their partners significantly in this space.
How would that enable same day shipping ? People usually do groceries once a week, but buy other stuff any day of the week.
I Guess this makes sense, Here in India the largest online store, flipkart has their own delivery services for the tier one cities. This happened because the private couriers were pretty bad.
Amazon's been delivering groceries in China for a while now:
http://www.amazon.cn/%E9%A3%9F%E5%93%81/b/ref=sa_menu_grcy?i...
http://www.amazon.cn/%E9%A3%9F%E5%93%81/b/ref=sa_menu_grcy?i...
Do they deliver fresh or perishable items? Amazon has had non perishable items for a while now (in the US); I think the article is referring to fresh items, such as produce.
Amazon only has prices going for it.
And for all groceries i looked up, even wholefoods have better prices... So either they are still figuring it out, or they already settled for the small convenience crowd that doesn't care for price
And for all groceries i looked up, even wholefoods have better prices... So either they are still figuring it out, or they already settled for the small convenience crowd that doesn't care for price