Amazon looks to expand grocery division

Amazon looks to expand grocery division

Amazon announces plans to expand its grocery business.

When most people think of Amazon.com, they think of books or Kindles, the products that launched the company into the stratosphere, or perhaps even of their more-recently branded mp3 music store. Fewer customers think of the online marketplace as a place to buy fresh produce, meat, or other groceries, but AmazonFresh, a subsidiary of Amazon.com, has been offering home delivery of such products since 2007, and according to a recent report from Reuters, the program is ready to expand.

If you’ve never heard of AmazonFresh, chances are you don’t live in or around its current hub city of Seattle. But judging by Amazon’s new-found determination to make the program a more nationwide export, the Seattle test run has proven successful. The first stages of the expansion will stick to the west coast, launching markets in major cities like Los Angeles and San Francisco. But Reuters claims that Amazon has at least 20 other locations on its mind for 2014, should the new markets perform as well as the Seattle operation has.

It’s understandable that Amazon is interested in moving forward into new business ventures. After all, the company has a longer and more proven history of offering high-quality products on a home-delivery basis than just about anyone, and earlier attempts to reach beyond the marketplace’s original book-selling conceit (the aforementioned Kindle and music store offerings) have brought the company greater power, riches, and renown than most would have been predicted.

Furthermore, breaking into the grocery market–especially on a home delivery basis within crowded cities–could bring huge paychecks for the Amazon team. According to the Reuters report, grocery retail stores netted a sales total of $568 billion in 2012 alone. Amazon’s slow and steady entry into that market is understandable: they need to get the AmazonFresh service model just right before going global, to avoid a harsh blow to their public reputation. But should the markets in L.A. and San Francisco pan out, AmazonFresh could easily become a worldwide fixture.

However, there’s still no guarantee that customers will go for online groceries. In a modern world where nearly every service and product, from music to publishing to video rental, has shifted to a primarily net-based model, big-box grocery stores have remained a stalwart presence in the day-to-day and week-to-week lives of most consumers. For Amazon to do to the WalMart empire what it did to the Borders one, it will not only need to offer a more user-friendly grocery shopping experience, but also provide its customers with a superior product. In other words, if Amazon can offer fresher fruits and vegetables on a home delivery basis than customers can get from the supermarket, it will conquer the market. If not, word of mouth will kill AmazonFresh before it gets out of California. Place your bets.

 

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