Amazon plans big expansion of online grocery business

Amazon.com Inc is planning a major roll-out of an online grocery business that it has been quietly developing for years, targeting one of the largest retail sectors yet to be upended by e-commerce, according to two people familiar with the situation.

http://www.reuters.com/article/2013/06/04/us-amazon-grocery-idUSBRE95311Q20130604

Interesting a take on this by Derek Thompson over at The Atlantic.com:

Today's most famous infrastructure quasi-monopolies in the private sector are probably the cable companies. Laying cable is hella-expensive for both legal and material reasons (Verizon abandoned its nationwide projects after covering less than 20 percent of the country), cable companies can charge such a mark-up on the communications bundle because they have a massive infrastructure advantage in a high-barrier industry.

Ditto Amazon, which is building a bundle of its own. Fresh Prime offers a unique package of services that takes advantage of the company's lead in digital and physical infrastructure: infinite books, fast shipping, fresh groceries, free streaming. Who in the world would try to build a competitor to this strange amalgam of hugely expensive and hardly profitable services?

No one. And, for Bezos, that is precisely the point.

The Amazon Bundle: Why the Retail Giant Is Like the Cable Company of the Future

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but they'll need to create a whole new & different infrastructure won't they? books don't need to be kept frozen ... ipods won't poison you if not purchased by a certain date ...

but they'll need to create a whole new & different infrastructure won't they? books don't need to be kept frozen ... ipods won't poison you if not purchased by a certain date ...

Right. And I don't think Amazon is exactly like a cable company either. The cable company has a pipe directly into your home that can be used to deliver an array of entertainment, phone, Internet, etc services. Amazon's pipe stops at their warehouses. After that, they're reliant on UPS and USPS to get product to the home. And I doubt that system works for groceries.

rickster wrote:

but they'll need to create a whole new & different infrastructure won't they? books don't need to be kept frozen ... ipods won't poison you if not purchased by a certain date ...

Right. And I don't think Amazon is exactly like a cable company either. The cable company has a pipe directly into your home that can be used to deliver an array of entertainment, phone, Internet, etc services. Amazon's pipe stops at their warehouses. After that, they're reliant on UPS and USPS to get product to the home. And I doubt that system works for groceries.

Amazon has been offering same day delivery on certain items for years now in some cities, through the use of local messenger/package delivery services as opposed to USPS/UPS/FedEx. I had a few items arrive the same day I ordered them when I was living in Oak Park. They used the same local service for a lot of my other packages as well. I'd imagine that the delivery side of this grocery expansion is simply an extension of that service they've already used quite effectively for some time.

ucjames wrote:Amazon has been offering same day delivery on certain items for years now in some cities, through the use of local messenger/package delivery services as opposed to USPS/UPS/FedEx. I had a few items arrive the same day I ordered them when I was living in Oak Park. They used the same local service for a lot of my other packages as well. I'd imagine that the delivery side of this grocery expansion is simply an extension of that service they've already used quite effectively for some time.

...and that's really the key to this: Just like books were Amazon's foot in the door for their original model (customer review system, use of distributed warehouses, big data), groceries are a way for them to scale up same-day delivery services, to eliminate the need to actually go out shopping for anything you'd want NOW.

Roger Ramjet wrote:but they'll need to create a whole new & different infrastructure won't they? books don't need to be kept frozen ... ipods won't poison you if not purchased by a certain date ...

Which is why they're only testing it in one market.

I've used the 1-day service, just the other day in fact for an ink cartridge but that was after trying the 4 places within walking distance that should have carried the model I needed but didn't. But if I didn't replace that cartridge I couldn't print. If no local grocery store has tuna fish (which isn't going to happen anyhow), I'll still have food.

Nothing against amazon, I use them a lot for hard to find CDs & videos. I just can't think of any situation where I'd need to order groceries from them.

Roger Ramjet wrote:Nothing against amazon, I use them a lot for hard to find CDs & videos. I just can't think of any situation where I'd need to order groceries from them.

The general idea is to get people to consider Amazon as a grocery vendor. Peapod took a long time to get off the ground but once people got used to the convenience they bought into it. I'm sure a lot of people felt like you before they started using Peapod.

As for their non-perishable food products, I relied on Amazon heavily when my kids were away at college. I could send them snacks, cases of ramen, tuna, ready-to-microwave products, laundry soap, etc. at low cost with free shipping. Really unbeatable. And if they had perishables available I'd have used them in a heartbeat.

spinynorman99 wrote:Peapod took a long time to get off the ground but once people got used to the convenience they bought into it. I'm sure a lot of people felt like you before they started using Peapod.

I'm not sure that people have bought into Peapod to this day. They aren't exactly doing very well. Amazon has their work cut out for themselves.

stevez wrote:

spinynorman99 wrote:Peapod took a long time to get off the ground but once people got used to the convenience they bought into it. I'm sure a lot of people felt like you before they started using Peapod.

I'm not sure that people have bought into Peapod to this day. They aren't exactly doing very well. Amazon has their work cut out for themselves.

Groceries in general are a tough business. Peapod's main weakness is that they don't control the whole enchilada outside the few markets where their parent owns groceries so the profits are split between their grocer partners and the company. Amazon appears to be buying into the Costco model where they can get an annual membership fee to augment the meager margins on food and controlling everything from distribution down keeps costs in check.

And if they had perishables available I'd have used them in a heartbeat.

The question for a lot of these models is, would you us them for perishables when you can't inspect them in advance, to make sure the banana is not rotten or too green, the steak doesn't have too much fat, the tomato not bruised, etc.?

stevez wrote:

spinynorman99 wrote:Peapod took a long time to get off the ground but once people got used to the convenience they bought into it. I'm sure a lot of people felt like you before they started using Peapod.

I'm not sure that people have bought into Peapod to this day. They aren't exactly doing very well. Amazon has their work cut out for themselves.

Count me as a satisfied Peapod customer. Living on the 14th floor in a South Loop condo, it's wonderful to have cat litter, sodas, paper and cleaning products as well as most grocery items brought to us, no matter how terrible the weather. I suppose that if we lived in the burbs somewhere, I'd be more inclined to hop in the car for most purchases, and wouldn't use Peapod at all. We still buy all of our "center of the plate" items from brick and mortar stores, as well as lots of specialty items from all over town. I have to say Peapod's produce is actually very good.

From talking to the delivery guys and observation of the delivery vans, my guess is that they deliver to about 25% of the 96 units in our building. Just my guess, and not scientific.

rickster wrote:

And if they had perishables available I'd have used them in a heartbeat.

The question for a lot of these models is, would you us them for perishables when you can't inspect them in advance, to make sure the banana is not rotten or too green, the steak doesn't have too much fat, the tomato not bruised, etc.?

Perishables encompass more than just fresh meat and produce. There are dairy items, eggs, packaged meats and frozen foods also. Peapod certainly guarantees satisfaction on meat and produce. And there's no rule that says you need to buy 100% of your groceries via an online service. As with anything else, there's an adjustment period. I know lots of people who balked at buying clothes online but now do it regularly because returns are so easy.

Hi- Actually Amazon comes in handy for people that are on gluten free diets. You can often get good deals on cases of gluten free nonperishable stuff at Amazon. If you go to Dominick's or Jewel, the same stuff would cost you a fortune. The person that runs mashupmom.com, which is a couponing and deal blogging site, has a child that is on a gluten free diet, and Rachel often posts about deals she has found on Amazon for gluten free and cassein free food. Hope this helps, Nancy

Not really amazon-related, but just in case somebody happens to search LTHF for "gluten-free":

http://www.celiacdisease.about.com/od/g ... list_6.htm

lists some internet companies specializing in (and shipping) gluten-free &/or nonallergenic foods. There's probably plenty more.

(Happy amazon prime customer for a couple of years now, by the way)

FYI...just tried to place my order for tomorrow, but they are completely
sold out. Sounds to me like they're doing ok.

Just got an email from amazon, "Introducing Chicago's Fresh Favorites". Promises free 2-hour delivery from Plum Market, My Fit foods (never heard of 'em) and Sprinkles the cupcake place.

rickster wrote:

And if they had perishables available I'd have used them in a heartbeat.

The question for a lot of these models is, would you us them for perishables when you can't inspect them in advance, to make sure the banana is not rotten or too green, the steak doesn't have too much fat, the tomato not bruised, etc.?

Peapod was a lifesaver after I had major leg surgery and spent the better part of a year on crutches. Produce was definitely their worst area, partly because I choose which produce I want to buy, and in what quantities, in part on what looks good. Finally I took to making notes on my order along the lines of "if it doesn't look good, don't bother." But it was definitely an imperfect system. Have they gotten any better in the past few years?

Amazon is clearly trying to compete with Instacart here - and while I'm a loyal Amazon Prime member, I adore Instacart!. You can place an order from Whole Foods, Plum Market, Marianos, Jewell, Costco, Stanleys, Tony's Fresh, Petco, Target, Pete's Fresh or even Butcher & Larder at Local Foods.

Instacart delivers within 2 hours for a $3.99 delivery fee (plus I add a tip) from any of the above and most (not all) charge the same prices they do in store. You can order odd amounts unlike Peapod ( say 3/4 lb of the Rosemay Ham at the Whole Foods deli) and the shopper will text you options if something is sold out, etc. You also can order items that are not in the online catalogue and they will try to find them at the store for you.

My son in Austin TX turned me on to them - he has a chronic illness and they are a real blessing for him. I've been using them now for about two months and love it - the folks who deliver and who handle my orders have all be so pleasant to deal with and really aimed to make sure I got great produce and such.

I am almost ready to give up my love of wandering market aisles coz it is so handy to have them arrive with precisely what I want.

There's a promo code you can use to get a discount on your first order COCONNELL67691 or use this URL: http://inst.cr/t/nPZ5zv for $10 off your first order - and most of the stores waive the delivery fee as well on your first order from them.

Hope this isn't too gushy but this has been my favorite discovery in ages - and a lifesaver when ill or in nasty weather!

I have used Instacart, Google Express, and Prime Now (Amazon). Let me tell you, I see a lot of folks using this for the first time with codes when they realize they are "in the middle of cooking multiple things" and are missing an essential ingredient. When you know you can stay with the other dishes cooking while someone else does the schlepping to get that essential ingredient to you it is a game changer.

I have a Jewel about 1500 feet from my front door and I have still used these services. I don't get much joy from shopping.
I hate waiting in line at regular grocers. I don't like moving other folks carts to get through aisles. I hate not finding things and then discovering I can get a raincheck.

These delivery services let me save wandering the aisles for interesting places like Fresh Farms and picking my produce at Stanley's. The rest of it, I am more than willing to let someone else bring my Coke Zero pallet from Costco, TP, laundry detergent., etc. I would have no qualms about dairy and eggs either being delivered despite my own habit of opening up the egg cartons and inspecting each egg by hand. As a bonus, I spend not only less time but less money using these services because it does not get purchased if it is not on the order.

New Naperville grocery store confirmed as Amazon Fresh, will offer way to skip checkout line

https://www.chicagotribune.com/suburbs/ ... story.html

Amazon Fresh, the online retail giant’s new bricks-and-mortar grocery store concept, is opening in four Chicago suburbs and hiring to fill 1,500 positions, the company announced Tuesday. Seattle-based Amazon did not share opening dates or addresses for the grocery stores, which will be in Naperville, Bloomingdale, Oak Lawn and Schaumburg.

https://www.chicagotribune.com/business ... story.html

Amazon Fresh to open Thursday in Naperville. Here’s what to expect from the high-tech grocery store.

https://www.chicagotribune.com/business ... story.html

Amazon sent me a $10 off a $35 purchase for the new Naperville store. I’m curious to check it out.

I went to the new Amazon Fresh in south Naperville the other day. It's in a space that is maybe half of an old Dominick's. It's a strange kind of hybrid store. They have some Whole Foods' 365 branded items, along with national brands that can be bought everywhere. There are a lot of Happy Belly products (not familiar with them). While they have things like Campbell's soup, they don't have all the varieties that you'd see at your local Jewel. Lay's products but no Jay's. And yet, there's maybe 5 kinds of ghee. The gourmet cheese selection is smaller than what you'd see at Jewel; the produce section is about the same size of a Whole Foods. There is a section that in other times might be a self-serve prepared-food buffet, but is now filled with packaged sandwiches and other dishes made on site. There is a pizza oven, and the prepared-food counter is miniscule, especially compared with Whole Foods.

There are normal grocery carts, and the smart carts, where you scan your items and drop them into bags as you shop.

According to an article I read, they are targeting Aldi and Trader Joe shoppers, specifically higher-income people who shop at those stores but who think Whole Foods is too expensive. Shoppers looking for value but who won't shop at Wal-Mart. The 70% of Prime members who don't shop at Whole Foods.

I don't know if you could do your entire shopping there. As I said, sort of a weird niche.

Amazon Fresh
3116 Rte 59
Naperville
(about 3 miles from the Whole Foods on 75th Street)

tcdup wrote:There are a lot of Happy Belly products (not familiar with them).

Happy Belly is Amazon's house branded food products. Its comparable to Roundy's food products at Mariano's.

tcdup wrote:I went to the new Amazon Fresh in south Naperville the other day. It's in a space that is maybe half of an old Dominick's. It's a strange kind of hybrid store.
...

According to an article I read, they are targeting Aldi and Trader Joe shoppers, specifically higher-income people who shop at those stores but who think Whole Foods is too expensive. Shoppers looking for value but who won't shop at Wal-Mart. The 70% of Prime members who don't shop at Whole Foods.

I don't know if you could do your entire shopping there. As I said, sort of a weird niche.

Amazon Fresh
3116 Rte 59
Naperville

Thanks for this interesting info. Rumor has it that the grocery store that will open in the new mall at Dempster and Waukegan in Morton Grove will be an Amazon Fresh. The footprint of the store sounds right.

I do most of my shopping at either of the Fresh Farms in Niles. Amazon Fresh sound perfect for me when all I need is milk, bananas, and a couple of avocados. There's no place near me in Morton Grove to do a quick shop like that.

Wouldn't want to do my entire shopping at Aldi or Trader Joe's either, but I do go there.

Giovanna

I was disappointed when Meijer's decided not to open up at Dempster and Waukegan. The closest grocery store to that neighborhood is the Mariano's on Golf. I doubt that Amazon Fresh is going to have much of an impact on them.

I'm disappointed, that they're not opening a Meijer's, too, but given that they closed a Golf Road location in Niles a couple years back, I'm not surprised.

Mariano's slides further and further every year. I don't go there, even though it's reasonably convenient.

Giovanna