
Amazon’s Battle to Break into the Grocery Market - pratap103
https://www.bloomberg.com/news/features/2017-03-20/inside-amazon-s-battle-to-break-into-the-800-billion-grocery-market
======
Lio
If Amazon can't be trusted to sell genuine memory cards, Apple accessories or
even books now, I wouldn't buy baby food from them.

[https://twitter.com/billpollock/status/844030960333152256](https://twitter.com/billpollock/status/844030960333152256)

[https://9to5mac.com/2016/10/19/amazon-fake-apple-chargers-
ca...](https://9to5mac.com/2016/10/19/amazon-fake-apple-chargers-cables/)

[http://247wallst.com/consumer-
electronics/2016/12/05/amazon-...](http://247wallst.com/consumer-
electronics/2016/12/05/amazon-memory-chip-scam-may-destroy-consumer-data-
photos/)

------
frogpelt
_“It takes a lot of time and experimentation to work through unpredictable
scenarios like a child picking up an item or a person wearing sunglasses or a
face muffler,” he said._

This is funny. Because these aren't unpredictable scenarios at all in a
grocery store, unless you are having to write software to deal with them.

~~~
Gargoyle
I'll be a believer when it can handle a Thomas Crown scenario - multiple
people in the same outfit crisscrossing around each other. While a bowler hat
flashmob is unlikely, a group of similar dark jackets etc isn't.

~~~
jerf
Actually, you can't forget the possibility that someone will attack it, for
profit or even just the lulz. If you have the idea I can pretty much promise
someone's going to try it long before there's a 1000 of these stores.

~~~
wongarsu
People are attacking regular stores' checkout systems already. We call those
people shoplifters. And our normal method of dealing with them (have a human
that catches a few of them to deter the more law-abiding citizens) will work
equally well in a checkout-less store.

The big new challenge is telling the difference between a shoplifter and a
normal software error. But that is only relevent for the most sophisticated
shoplifting ideas.

~~~
illumin8
Exactly. And, since you have to scan your smartphone before entering, they
already have your name, address, credit card details, etc., so shoplifting
would be extremely risky. Most teenage shoplifters might be able to outrun a
security guard that saw them leaving with unpaid items, but what good does it
do you when the store already has all your personal details and can simply
send the police to pick you up at home?

------
afarrell
Amazon needs to get a lot better at selling people complimentary goods. Once I
buy something, I frequently see multiple advertisements for that exact
product. Why can't they develop a database of products that compliment each
other and so when someone buys a kitchen tool, they start advertising
cookbooks.

Example: "On Prime Day, Members purchased over 215,000 Instant Pot 7-in-1
Multi-Functional Pressure Cookers"

[http://www.cnbc.com/2016/07/13/amazon-prime-day-is-
biggest-d...](http://www.cnbc.com/2016/07/13/amazon-prime-day-is-biggest-day-
for-online-retailer-ever.html)

If you have a database of 100s of thousands of people who all are suddenly
looking for recipes and raw materials for a pressure cooker, why not advertise
to them?

~~~
SerLava
I'm no expert in this area. But I think this is due to the inherent nature of
a system where the ads are all pushed by people marketing specific products,
rather than a centralized "what is the best product to market to this person
right now?" type of system.

It's pretty easy for a toaster guy to say "Amazon, show this ad to people who
looked at toasters" without ALSO selectively hiding it from people who just
bought a toaster.

It's harder to pin down a pattern indicating the imminent purchase of a
toaster. Like for instance, someone seems like they're probably 20 years old,
and now they're looking at wedding stuff. They are probably going to be
influenced by a toaster ad, but getting it to them would require a toaster
manufacturer to set up some _pretty_ complicated shit.

------
thedarkginger
I know this discusses a few strategic plays Amazon is making but shortfalls of
the self-checkout project (AmazonGo) are interesting:

"In its video touting Amazon Go, the company said it was aiming to open the
site to the public in “early 2017,” and it hasn’t provided an update to that
timing. But the technology has been crashing in tests when the store gets too
crowded and requires human quality control, people watching video images to
make sure customers are charged for the right things, according to a person
familiar with the plan."

Not super familiar with image recognition but do you think that's just a
failure of the training data set or a much more complex technical problem?

~~~
trome
Sure, but who'd actually trust Amazon with their food? I know I wouldn't,
they've screwed up 3 out of 5 orders in the past year, leading me to have
little faith that they won't give me E Coli covered veggies.

They're opening a large, car centric Amazon Grocery pickup location just over
in Ballard as a test, but the particular location they picked is a parking lot
for 3 to 4 hours a day, and is over 3 blocks from transit (and where they will
be putting the light rail in) due to Safeway & Walgreens already owning that
prime real estate.

~~~
thedarkginger
Since the article stresses repeatedly that Amazon is all-in on produce... I
think this is a big question for their ML approach.

One of the annoying parts of not-really-self-checkout that is available in big
grocery stores today is that you have to scroll through a screen, choose the
correct brand (i.e. Dole Banana), and then weigh it before it prices your
order.

Wonder what their strategy is to price variable weight products (i.e. produce)
without introducing new friction into the user experience

~~~
ghaff
Yeah. This is one of the reasons why I really don't care for self-checkout in
grocery stores. Sure, self-checkout is mostly OK so long as you're swiping
small boxes of barcoded stuff. But get to produce and it's a mess. I basically
won't use self-checkout if I have any non-barcoded merchandise. (Which
basically describes every time I go to a grocery store.)

~~~
twothamendment
Yes - no bar code? I won't self check, but also the large items that won't fit
in the bag. I learned the hard way that it can take too long for them to get
the self checkout lane to stop crying about how I didn't put a 10' pipe in the
bag. Unless I have one or two well marked, small items, I avoid the self
checkout.

~~~
ghaff
The particular fascination of big box home improvement stores has seemed a bit
odd given the number of items that don't fit with the model. Sure a lot of
small purchases do but many don't.

------
samfisher83
Grocery net profits are 1.7%.

[http://www.fmi.org/research-resources/supermarket-
facts](http://www.fmi.org/research-resources/supermarket-facts)

Amazon barely makes money on retail operations. What is their rationalization
in getting into this market?

~~~
lotso
From the article

>“Amazon wants to be the first thing any consumer thinks of when they need to
buy anything,” said Jim Hertel, a senior vice president at marketing
technology company Inmar Inc. “Food is the largest retail category. They can’t
do what they want to do without grocery and they’re definitely not going to
give up.”

I'd also imagine Amazon thinks they can do much better than a 1.7% margin by
leveraging all of the improvements to their approach outlined in the article.

~~~
justaman
2030: Government breaks up Amazon into smaller companies.

~~~
komali2
Why would that happen? US government appears quite happy to allow massive
companies to operate as they please. There hasn't been much "trust busting"
since, well, the "trust busting" era, outside of finance anyway.

------
gwern
> Workers at Amazon Fresh, the company’s grocery-delivery business, threw away
> about a third of the bananas it purchased because the service only sold the
> fruit in bunches of five, the student concluded. Employees trimmed each
> bunch down to size and chucked the excess.

If anyone was wondering about the bananas, the paper
([https://dspace.mit.edu/bitstream/handle/1721.1/99025/9213069...](https://dspace.mit.edu/bitstream/handle/1721.1/99025/921306927-MIT.pdf;sequence=1))
says (pg33) that after it was identified, they switched to selling 2lb bags of
bananas, which the banana growers were already able to provide, so they
scrapped the whole exactly-5-bananas-and-tear-to-make-fit.

> In addition to the obvious financial impact of this, many Associates found
> the process frustrating since it was highly repetitive, and they did not
> feel they were creating value for the customer

Well, that's one way to phrase it.

------
oculusthrift
i'd love it if they could do this in a way that ensures quality. my biggest
problem with amazon currently is even with things as simple as cologne or
cookware, you can't tell if what you'll get is real or a cheap knockoff.

------
valarauca1

        It lures inventors and retailers with shopping volume
        and frequency, and then sinks them with low margin.
    

That is really the only quote you need to read.

Grocery margins are razor thin. Local/Regional competition is insane.

------
Jason-Andrade
IMO every company's approach to the problem is completely wrong! You don't try
to offer online the same items that local stores sell off the shelf. Instead,
treat the online outlet as an interactive test-market.

Walmart and Amazon are both in a great position to do this! Setup an online
store that allows established customers to suggest items that they are unable
to find on local store shelves. Allow them to also flag other submitted items
as interesting. You have a curation staff that fleshes out submissions with
images and descriptions before they go live. The company's merchandiser
evaluates the balance between interest in an item and the difficulty of its
procurement. To aid in appropriate pricing, perhaps the system also requires
submissions to include a reference to the most similar item that is already
stocked on store shelves. Because the company is offering exclusive access to
the items the profit margins can be kept high.

From what I've experienced product selection in US stores is in general far
better than even the same store in Canada (including Walmart), but there might
still be a few items not stocked in local stores that people will pay a
premium for!

------
brokenmasonjars
Sort of wish they'd focus on what they already have first. I mean I get it,
it's a good market to get into ...but.. how about - making a single login for
abebooks fr, uk, com, etc.. that aligns with your main amazon account and -
audible account. Why do I need maybe 7 different accounts on services owned by
the same company? Better yet, how about taking the databases of books on sale
at the various abebooks sub regional sites and put them on the main amazon.com
page. I collect a lot of old cookbooks, and old lectures (Rede, Chichele, Ford
etc) and often find that to find better deals than what is on amazon.com I
have to go on different abebooks sites to find them. Also - have had
experiences where I go on amazon fr or ca and order a cookbook easily
purchasable on those sites vs .com site. It's terribly aggravating! So I just
wish they'd focus on making that easier to deal with before venturing onto
other areas. That said, grocery should be decent.. I already hire taskrabbit
individuals to do my shopping for me..they are hit or miss.. I never put them
in charge of buying seafood..never.

~~~
scrollaway
> _making a single login for [...] Why do I need maybe 7 different accounts on
> services owned by the same company?_

Wasn't this what the HN community was up in arms about when Google did it for
YouTube?

~~~
swampthinker
Not really. The backlash came more from Google trying to push G+ alongside
that YouTube rollout.

~~~
erikpukinskis
I lost control a YouTube account with over 4 million views due to the
changeover, so I am kind of bummed about it.

------
soheil
A few things that Amazon could do better compare to Instacart:

\- they bring you huge green boxes and often put only one or two items in
each, they are highly unsightly and take up a lot of room, this must be part
of their marketing campaign since it has Amazon written all over it, they ask
you to return them the next time after their logo has been imprinted on every
part of your brain

\- sometimes they put ice bags in said boxes if you forget to take them out
they melt and not all the boxes are water proof so water can run through them
onto the floor and it can also spoil even if you take the ice out since it
leaves the box moist

\- not clear where they source their items, Instacart is clear if I want
Wholefoods I select Wholefoods, Amazon seem to have way fewer options and not
intuitively clear if I'm ordering from a store that I picked or getting random
access grocery (RAG)

\- they mention they have Belcampo as a store when navigating to it they only
allow you to purchase sausages!!!

------
norea-armozel
I'm not sure if Bezos and company know what they're getting themselves into
with the US grocery business. It's a cut throat business which has not just
some big players but several small to medium sized grocery chains (some as
subsidiaries and some as stand-alone companies). And I can tell you as someone
who's work in grocery the profit margins are thin outside of the US holidays.
Frankly, if Bezos thinks this is going to lead to adding actual profitability
to the delivery of their other products I'm not sure I see that possibility
materializing under the guise of grocery stores and grocery delivery. I hope
they have plans to retreat from that business when (not really if) Kroger and
Walmart hammer them on the price. Otherwise, I can see them learning a painful
lesson in the near future.

------
odonnellryan
So, my problem with this: I can't usually get things delivered in the same day
I want them, and sometimes even the next day. There's no slot available and so
on.

I don't really think out what I need days in advance. I'm like, "oh, I'm out
of... whatever, I'll go to ShopRite today."

~~~
jenamety
So if i knew you order toothpaste on average every 48 days, i could put a new
one in cheapo snail mail on day 43. who is in the best position to predict
this and take it completely off your mind? current grocers or amazon? your
scenario presumes you need to invoke the order yourself. Amazon is going to be
predicting your needs (poorly at first but improving over time). I'd wager
this big picture includes getting audio feeds from your house 'hey - who drank
the last of the milk?' 'are we out of eggs?', 'that's a shame, these
strawberries went bad before i could use them'. I'm sure amazon has considered
trash/recycling services to scan product barcodes to see what you've used up
to add to the 'predict you' models.

A big challenge is going to be charging me for product i don't need yet. if i
get toothpaste 15 days in advance of needing it because i traveled for 15 days
of the period, then i'm not going to like being billed for something so soon.
i'll feel scammed, like they're trying to ram product/sales down my throat.
for this i'd be curious to see if there's a way to charge when the product
begins to be used- so medicine shelf time doesn't cost you. That and no-
brainer returns. (think dash button for come pick a product up)

Just my 2 cents

~~~
ghaff
Amazon already has subscriptions. Personally, I don't buy anything with a
combination of frequency and predictability that makes a subscription make
sense but obviously some people do. (Diapers I assume are one thing.) And that
becomes harder with with perishables. Customizable but pre-populated (based on
prior purchases) would seem to make a lot more sense.

~~~
jhpankow
My SO has signed is up for subscriptions for certain recurring purchases. Our
usage is too erratic to put on a schedule. I have a new job at home: finding a
place for all the things we get automagically delivered from Amazon that we
aren't ready to consume. I finally spoke up when we had three containers of
dishwasher soap and nowhere to put them.

~~~
ars
They email you before sending you stuff, just skip the delivery if you don't
want it.

Personally I set everything to six months and then bring it forward when I
need some.

~~~
ghaff
Even if there are some small savings, at some point it's just less mental
energy to place an order when you need something, which takes? I dunno 2
minutes.

------
djrogers
> "Online grocery is failing"

I'm sorry to hear that, because Amazon Fresh is the greatest thing to happen
to my family's grocery shopping since we became a family. Seriously, we'll the
$40 dash wand to add stuff to our grocery list through the week, then I'll sit
down for 10 minutes and add some stuff from my wife's meal planning, then boom
- next day (or two, depending on when we want it) we have our groceries.

Never gotten the moldy strawberries mentioned in the article, and with a few
odd exceptions, everything is cheaper than both the grocery store and target,
which saves even more time With 2 store trips a thing of the past.

------
baron816
Physical supermarkets can still be really terrible. It always seems to take me
over an hour to do my grocery shopping.

My idea to bring the industry into the 21st century would be take a similar
route to Blue Apron et al, where all the ingredients are combined into a
single package. The difference is that the work of preparation would be
distributed to local restaurants looking to supplement their income, and
people would just pick up their uncooked packages there. That would keep the
cost down and scale well, while still being convenient for customers and allow
them to cook new, interesting meals everyday.

~~~
gautamnarula
I've thought about this in similar ways. The reason I don't use Blue Apron is
because it's pricey--$10/meal when you're cooking at home isn't very
affordable unless you're a lot of disposable income.

But I understand why it's expensive. Each box of ingredients must be shipped
with multiple cooling packs to keep it from spoiling, and shipping to each
individual's doorstep also adds costs.

Imagine if grocery stores offered a similar Blue Apron like service, where
they came up with good, reasonably healthy recipes, and packaged all the
ingredients (which they already have in store) in the appropriate amounts into
a box with recipes and instructions, just like Blue Apron, and you could pick
up the box at the grocery store. They could easily offer this for less than
half the cost of Blue Apron, and the value proposition (at least to me) would
be so big (no meal planning, no wandering around a the grocery store for an
hour, no risk of buying too much stuff that I then goes bad) that'd be a no-
brainer to use it.

~~~
hossbeast
At Safeway, this is referred to as, "The Deli".

------
Spooky23
It's cool that they are trying to innovate here, but it seems like a weird
area to focus on.

The high growth areas in grocery are things like prepared foods and produce.
Owning the middle of the store to try to out-Walmart Walmart seems like a low-
value proposition.

I've been using Amazon Fresh for a few months. The delivery aspect is awesome,
but the rest of the business is pretty questionable. They cannot keep anything
in stock, and I'm basically getting a week of groceries free every month
because they cannot figure out that dropping a cantaloupe on top of a bag of
Doritos and loaf of bread is a bad move.

~~~
Johnie
>I've been using Amazon Fresh for a few months.

This is an artifact of living in Silicon Valley bubble. The rest of the
country don't live this way.

~~~
Spooky23
I live in Albany, NY. Definately not in a bubble.

They have an arrangement with USPS to deliver groceries. The service itself is
fantastic. It's just that they are effectively attaching $20 to each order in
different costs and have trouble managing the packing operation.

It's great for us because they deliver early and it reduces our grocery trips.

~~~
losteverything
Curious? Do you have an online grocery pick-up nearby. Like Walmart or Wegmans
or whatever?

I think there is a race: Pick up or delivery. Both win. If you try pick up at
the store it becomes SO easy. And delivery also is easy...

------
bertlequant
At some pt I have to wonder, just because you can do something does that mean
you should? I don't really look forward to a future where Amazon is involved
in every business possible. Especially if it's Weyland-Yutani-esque and
involved in cave exploration.

~~~
archgoon
Oh come _on_. Weyland-Yutani? It's not like Jeff Bezos has his own space
program or something.

------
imh
All the facial recognition stuff is extremely creepy. Who could think the
internet version of privacy is a model for real life?

------
Shivetya
surprised they don't operate the stores so as to sell other amazon items via
kiosk or for pickup. similar to how grocery stores have pharmacies

------
twothamendment
I buy a lot on amazon, but groceries? I can't see it happening. I really don't
want counterfeit Oreos.

~~~
paulcole
two black poker chips stuck together with elmers glue

