The Wall Street Journal reported today that Amazon might launch a grocery store business. While the Amazon team has not confirmed the report, a few hypotheses emerge about how Amazon might approach the future of its grocery business:
- Amazon could use new physical spaces as dark stores for order fulfillment and/or as places where customers could pick up their orders. These new locations would help relieve some of the tension in Whole Foods stores between the need to fulfill orders and provide a convenient and pleasant shopping experience at the same time.
- Retailers have been increasingly shifting their offerings in the food space to provide more options in ready-to-eat or ready-to-cook meals. Amazon has been exploring this area with its Amazon Go stores, and has developed its own brands and recipes. New physical spaces would give Amazon the chance to extend its quick-service meal offerings.
- Amazon has pushed the limits of the Whole Foods brand by trying to bring in more traditional products, which, anecdotally, has not resonated well with its most loyal shoppers. A new grocery store brand would allow Amazon to have a presence in the physical grocery world without putting further strain on Whole Foods. Furthermore, a new brand would open more opportunities for Amazon to partner with the big suppliers that sell mainstream food and household brands.
This development is a good example of how quickly the online grocery space is shifting, and we expect the trend to continue. To stay up to date, reach out to our teams and join us next month at our eCommerce & Omnishopper conference in Boston.
For more information, please contact:
Alice Fournier, Vice President (eCommerce)
Tory Gundelach, Vice President (Grocery)
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