
Amazon plans major move into grocery business - barredo
http://preview.reuters.com/2013/6/4/amazon-plans-major-move-into-grocery-business-1
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kirinan
As someone who lives in Seattle, let me tell you about the service (and Ill
even compare it to safe ways delivery service!) You schedule a time, and pick
out your groceries. You can attended or non-attended deliveries (Id advise
attended), and you can basically order anything from the local area and its
reasonably priced. You tip the delivery guy (usually like 5$), and they come
to your house and deliver. The review of it is that the produce is hit or miss
(most of the time a very big hit, and its usually very good), and most of the
stuff is as advertised. The prices are very comparable to stores in the local
area, and if you dont have to pay for the delivery fee, can even beat them. In
comparison to Safeway's service, it blows it out of the water. My safeway
experience has been plagued with bad produce, and out of stock items, with
amazon this is never a problem. Most of the same, Amazon can deliver
everything the next day, but sometimes it can take 2 days. Its VERY reliable
in terms of times that are set (if I say I want between 7-8 in the morning,
the dropoff guy is always here during that time.) Overall, I enjoy using it
for getting fresh produce delivered to my apartment with little to no hassle.
I also have an amazon credit card, and it gives me 3x points on my order
(which is better rewards than most rewards card) so that is an added bonus. Im
excited if the rest of the country can get the same thing. As someone who
moved from Ohio, its a service that I never knew how badly I wanted till I
used it.

~~~
samirahmed
As a seattle resident who lived here a year ago and moved back again. I have a
few things to add to this ...

1\. Amazon Fresh prices one year ago were pretty high, they have driven costs
down on everything except produce.

2\. I live close to a City Target and have been avoiding Amazon Fresh because
I thought the target was cheaper. Yesterday I took my $100 grocery bill and
recreated it on Amazon Fresh, and excluding produce, it was $89.00. I was
shocked to see the prices were cheaper for most things.

3\. The delivery is free for $100 purchases, so you can't use it like regular
amazon (or amazon prime).

4\. The delivery times range from 5 am in the morning to late in the evening.

5\. The packaging is often reuse able, plastic containers or clothe-bags and
so you can leave outside and the delivery folks will pickup the old packaging,
this is much more sustainable than regular amazon cardboard packaging.

6\. Living in a city, it is easier and cheaper to buy in bulk of Amazon Fresh,
because they prefer selling in larger quantities. Some items have 2 or 4
quantity minimums. If you don't have a car this is fantastic.

~~~
MartinCron
_3\. The delivery is free for $100 purchases,_

Or, if you buy enough (not entirely sure what the threshold is) to get "Big
radish" status, delivery is free for $50 purchases.

~~~
bbgm
After having a baby, I started using Amazon Fresh heavily. 5 am deliveries are
awesome, and the costs are < PCC or Whole Foods, and you occasionally get some
pretty interesting stuff. It's not perfect, but it has replaced pretty much
most of our produce shopping with the exception of specific "ethnic" items.

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teej
As an SF resident and hyper-avid grocery delivery user, I welcome our new,
Amazonian overlords.

I tend to get 1-3 deliveries from Amazon a week, so tacking on groceries to
that list would not be a major problem. There's still a question of how you
handle perishables like milk though. Plus, I've found that most delivery
services tend to be incredibly variable in their produce quality.

For those curious about the startups in this area, I did a bit of a writeup
where I raced three services head-to-head against each other.
<http://teejm.com/the-great-grocery-game>

~~~
potatolicious
Amazon handles perishables by having refrigerated trucks, and putting your
groceries in insulated plastic containers that also have cold packs, as
needed.

It all works pretty well as long as you don't get too crazy about how long you
leave the groceries outside.

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zwieback
Question for those of you who have used this service: how often do you get
fresh fruit or vegetables that don't meet your expectations?

When I go grocery shopping I agonize over every single item and when something
doesn't look fresh I change my dinner plans. I'm not sure I'd be comfortable
buying perishable stuff online although I'd love it for dry goods and cans.

~~~
hkmurakami
I'm in the same boat as you, but I think another relevant question is what
fraction on people actually agonize over such things like us? what fraction
doesn't care?

then in addition, we'd have to consider whether having items chosen for you as
opposed to chosen by you would engender more negative reactions buy the user
(which I imagine ius the case since there's no more incentive to protect
yourself vs purchase regret)

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atacrawl
I don't get why Amazon would want to do this -- it's always been my impression
that grocery stores' margins are razor-thin. Am I wrong about this?

~~~
jonknee
Amazon loves razor thin margins.

It's also a good way to start cutting out their biggest expense--shipping. If
Amazon is already going to be in your neighborhood every day dropping off
food, I don't see why they can't also drop off other Amazon products.

~~~
vijayr
I wouldn't be surprised if in a few years from now, Amazon starts directly
competing with FedEx (not just delivering the products they themselves sell).
If there is one company that thrives on volume and razor thin margins, it is
Amazon.

Just look at the range of markets they are entering - it is scary. cloud
storage, selling almost every physical product we can imagine, online video,
tablets (and phones soon) ...

~~~
michaelxia
thats an interesting point. I'm not sure its all part of some large plan
slowly in motion, more likely just monetizing parts of their infrastructure
they already had.

what if my kids ask me what "stores" are.

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sixdimensional
Does anybody know if Amazon partners with large grocery chains? Seems to me
that if Amazon.com was the last mile delivery/fulfillment service for already
existing brick-and-mortar grocery chains, then they wouldn't be competing and
maybe the grocery chains might actually go for it?

Maybe there is a first mover advantage for a chain who partners with Amazon.
They could piggyback the service on top of the grocery chain's existing
infrastructure and exploit Amazon's infrastructure and scale at the same time.

Maybe that way, the physical grocery stores could still keep their doors open,
lower prices, perhaps be reduced in size and become more of a local warehouse.

~~~
natrius
Sounds a lot like the Borders strategy. It worked well for Amazon. For
Borders? Not so much.

~~~
sixdimensional
Good point. It seems like a non-starter all the way around because I'm sure
grocery stores have thought about running this operation themselves.

References regarding the Borders comment:

\- <http://money.cnn.com/2001/04/11/companies/amazon/>

\- [http://www.bloomberg.com/news/2011-07-19/borders-
champagne-t...](http://www.bloomberg.com/news/2011-07-19/borders-champagne-
toast-to-amazon-s-bezos-marked-start-of-chain-s-demise.html)

\- Google Trends showing Border's demise?
[http://www.google.com/trends/explore?q=borders%2C+amazon.com...](http://www.google.com/trends/explore?q=borders%2C+amazon.com#q=borders%2C%20amazon.com&cmpt=q)

It's still amazing that one can't go online to order groceries and have them
delivered from a local grocery store, especially on a recurring basis. It
would be a nice amenity.

Does it really boil down to grocery store + eCommerce =
politically/financially/practically hard problem? Seems like there must be
some solution that would work.

~~~
sfall
I don't think amazon would want to trust a third party with a new venture

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pkfrank
Given the success of FreshDirect, I really like Amazon's chances at nailing
this vertical. After all, they are experts in shipping logistics, managing
distributor-relationships, and handling payments/customer service.

I trust them to seek out high-quality partners and suppliers, deliver with
reliability at low-cost, and make the entire thing as seamless as possible.

Will be interesting to see how transparent (or not) they are about their
suppliers as it relates to GMO's, etc.

This will be a great tie-in and supplement to their "subscribe and save"
(usually) non-perishable line of products.

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minouye
Has anyone from the Seattle area used this service regularly? I'd imagine
after 5 years it's become pretty polished. That seems like an eternity to
improve their business model and get the economics right.

~~~
finnh
It is FANTASTIC.

I get about 75% of my groceries through it, and have been for the entire time
it's been available.

Their default produce & meat isn't quite as good as a WholeFoods or my
favorite local store (Madison Market aka Central Co-Op), but AmazonFresh has
recently started sourcing certain items from local specialty vendors - think
Pike Place Market fish guys, that sort of thing. Those items are great, and
it's wonderful to have them delivered.

Over the years they've tweaked a few things: changed the minimum delivery
size, added a "tip" for the driver (which I think is wrong - they should be
paying these guys a good wage .. but that's not Amazon's style, I guess).

They've also iterated the website multiple times from an initialy somewhat
poor UX into the current one, which is pretty good.

EDIT: oh, and being able to add groceries to your order until roughly
midnight, and still getting them on your doorstep by 6am the next day ...
magic.

They also deliver certain Amazon items (they call this "Amazon.com NOW"), so
I've ordered things like digital cameras and had them arrive within hours.
AWESOME.

~~~
minouye
Delivering non-grocery items seems huge--apparently the end game of the
delivery service could be a lot bigger than just groceries. Also the early
morning delivery window sounds great. I used to get CSA delivery early in the
morning and it was extremely convenient, but they just didn't have the
selection I wanted.

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grinich
I wonder how much Amazon (and similar) will effect urban planning in the
future. Delivery lets them undercut existing sotres that pay exorbitant rent
for storefronts in urban areas. They did this with bookstores, then the
general store, and now it seems grocery stores.

Think about what remaining businesses are based on locality, but whose margins
are eaten by the rent. Car dealerships. Malls (for clothes). Furniture. The
uncracked problem with these is you can't easily try/fit the item before
buying.

If Amazon can somehow solve that...

~~~
bostonpete
I'm pretty sure most new car dealerships are guaranteed, by contract, to have
a regional monopoly for their makes. That would be a huge barrier to anything
resembling an Amazon for cars.

~~~
DanBC
How is that legal? How doesn't that fail against competition laws?

~~~
itg
Dealership lobby? Tesla is fighting against them in some states.

~~~
bostonpete
Is there really a need for a dealership lobby to protect this practice? I
don't think exclusive distributor agreements are that uncommon for all sorts
of merchandise.

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jonasvp
I hope Amazon is using this to take over last-mile delivery. That would be an
amazing opportunity to roll out something like <http://www.cargocap.com/> \-
though probably not in a typical US suburb.

In a somewhat denser city, doing last-mile delivery by something other than a
people-killing, air- and noise-polluting truck just makes a whole lot of
sense. I know it's far off but there are few companies other than Amazon that
I would trust to pull it off.

~~~
TillE
Grocery delivery is the kind of thing that only makes sense in the suburbs
(for able-bodied people, anyway). I live in Berlin right across from a grocery
store, around the corner from another one, and a five minute walk from 3-4
more.

That's a little more than usual, but really any well-planned moderately dense
city should have most of your immediate shopping needs within a short walk.
This is a service for suburban areas where you'd otherwise have to drive.

It would be nice to see them use electric vehicles, though.

~~~
timthorn
Ocado, Tesco and others seem to do a reasonable line in home delivery in
London - no matter how close the shop, if you're doing a week's worth of
grocery at once home delivery helps.

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codegeek
Yes dear amazon. Being your Prime member, please let me order grocies online
through you and hav them shipped especially for recurring items like Milk,
Eggs etc.

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programminggeek
Amazon could be very successful if they setup "grocery warehouses" in local
areas and just delivered groceries to people. It's not a wildly different
model than the current grocery store, just with less need for prime real
estate and you'd be paying delivery people instead of checkout people.

It can be done and it can be done profitably, it's going to be more about
finding people who don't want to spend their time going to the grocery store.

~~~
protonfish
I worked for an online grocery app and most customers were elderly,
handicapped, had 8 kids or were small institutions (like group homes) - people
with a lot of time at home, but difficulty getting out. From what I saw,
online shopping will probably never expand beyond these types of customers for
several reasons.

Grocery shopping in a browser UI can be a decent experience but will probably
never be as clear and convenient as seeing the actual item, especially for
non-prepackaged (meat, fish, produce, floral, etc.)

Convenience - online shopping requires planning ahead and being home in a time
window to receive delivery. For the homebound it is no issue, but for most
working people it's easier to just stop by the store on the way home.

~~~
nabnob
I disagree completely. I live in Seattle and work roughly 50 hour or more
weeks, and I enjoy spending my free time with friends or working on projects.

I already leave my apartment for work at around 8:30 am and, after stopping at
the gym on my way home, I'm usually home around 8 pm.

If I make a grocery store trip, this adds probably 45 minutes to an hour,
meaning I get home at 9 pm, which sucks.

I've started getting produce through a local CSA-type delivery service, and
it's so convenient and easy. I think Amazon Fresh will work well for people
who are busy and have the disposable income to spend an little bit more on
delivery.

~~~
protonfish
I forgot one more type - people that can shop online while at work.

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munificent
Just wait until this gets coupled with self-driving trucks.

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kakoni
Dear Amazon, could you expand this to Finland?

