"As many businesses struggled to survive the pandemic, Amazon.com Inc. was quietly building a national grocery chain.
"The first Amazon Fresh store opened to the public in Los Angeles in September. Store No. 11 opened Thursday, and Amazon is working on at least 28 more, from Philadelphia to the Sacramento suburbs. The company is also testing the 'Just Walk Out' cashierless shopping technology created for its Go convenience stores at an Amazon Fresh location in Illinois.
"More than a decade after it started selling groceries, Amazon has a tiny sliver of the $900 billion U.S. grocery market and has watched traditional chains finally start figuring out how to sell food online. Amazon Fresh, industry watchers say, is a way for the company to become even stickier with devoted Prime members, as well as appeal to a broad cross-section of America—from lower-income shoppers who frequent discounters like Walmart Inc. to wealthier customers looking to pick up online orders."
The story goes on to point out that prices at Amazon Fresh "at least so far, are low. A basket of 30 commonly purchased grocery items in one of Amazon’s Chicago-area stores last month undercut Jewel-Osco, an Albertsons Cos. Inc.-owned mainline grocer, by as much as 20% when including items on sale, and is competitive with Aldi and Walmart.
"Grocery analysts say Amazon Fresh stores are likely cheap to launch and even cheaper to run - the perfect weapon to stake a long-term claim in a famously low-margin industry."
You can read the entire analysis here.
- KC's View:
There's no question that Amazon is getting into a highly competitive segment, and the opposition isn't going to just allow it to take market share the same way that so many bricks-and-mortar retailers did when it came to e-commerce.
But Amazon brings some big weapons to the fight, and the biggest is its data - knowing exactly how many of its shoppers and Prime members live anywhere near one of its Fresh stores, knowing exactly what they buy and what their preferences are, what buttons it can push that will work most effectively, and owning the delivery method to communicate with those shoppers.
Huge advantage. Underestimate it at your own peril.