Thursday, September 29, 2016

Amazon's battle for grocery dollars

John Martell shares this article about Amazon's fight in the grocery space. Despite an influx of funds for grocery delivery startups and lots of room for growth, traditional brick & mortar groceries have proven very difficult to displace.

1 comment:

  1. There is a lot of discussion in this, and other articles on the topic, about the potential market value without too much assessment of the barriers. Two hypothesis about the barriers which may be supported by the adoption trends to date.
    1) Current online merchandising approaches for fresh produce don't work because you don't have the information needed to assess the quality of the produce. Without this information you cant make decisions on quantities or substitutes. As a simple example: years of banana buying experience equips you to quickly assess the ripeness of the fruit. Based on this assessment you know when you will be able to eat it and finally to decide if that meets your fruit consumption agenda or if you need to switch to pears.
    2) The second issue is more fundamental, cost. The economics of the 'last mile' are potentially problematic for online sales. With bricks and mortar sales the shopper supplies their own labor to pick, pack and transport. In an online model this cost is explicit and, for a lot of shoppers, may be too high relative to the value of their own labor. There are two potential solutions for these issues 1) better real time, visual merchandising & 2) more automation in picking, packing and transporting (but I'm confident that isn't news to Amazon or others).