Wednesday, July 03, 2013

Amazon's Strategic Move Into Grocery Business

Amazon  has been mastering E-commerce since it started its business. Amazon has set its reputation on cultural products, books, CDs and video games among others. As the time went by, Amazon expanded to new fields, and now is able to sell clothing, and even groceries.

For five years, Amazon has been testing Amazon fresh in Seattle, and now plans for 2014 to open its concept in 20 new urban zones. Among one of the main reasons Amazon is betting on Amazon fresh, is to be able to offer to its customers delivery the same day of the order. 

Grocery E-commerce has raised a lot of questions. Indeed, there are very few companies in the world that have been able to develop a profitable business modell out of it. The most efficient and profitable way is for sure what exists now in france, drive through supermarkets.

But Amazon has for sure a lot of strength to succeed:
  • A great knowledge of E-commerce website, with the ability to upsell for example.
  • The excellence of their supply chain, which will help them to lower the cost of the last mile delivery
  • A great data base of customers to leverage, and to convert to Amazon Fresh.
  • Amazon already own top of the line warehouses, which means they don't need to invest much more to store the groceries.