It’s not that Amazon is simply faltering when it comes to grocery sales. “As much as we believe this has solid long-term potential, we think the logistical complexities and the low margin nature of grocery mean that it will be an expensive drag on profits for the foreseeable future.” “As much as we are encouraged by Amazon's drive into categories like fashion and home, we are more hesitant about the AmazonFresh business,” Neil Saunders, managing director of GlobalData Retail, noted in an email to Retail Dive regarding the company's first quarter earnings. The overall volume of goods - aided by Amazon's Marketplace, which provides half of the goods sold on its site - and the high level of convenience for buyers bode well for Amazon's grocery endeavors, but it has plenty to accomplish before it can dream of dominating the market. So why isn’t Amazon already a major American grocer, after 10 years at it? The grocery space in general is something of a quagmire, beset by thin margins and complicated operations, and many of Amazon's efforts remain experimental. And I really think that Amazon has the potential to become a huge competitor in the space."īy time of publication, Amazon did not provide anyone who could speak to Retail Dive for this story. ![]() "Amazon is not new to the space - they launched AmazonFresh 10 years ago - I think Jeff Bezos today would see AmazonFresh is a failure, but there are clear signs that Amazon is going to be persistent. " Cooper Smith, research director at digital insights firm L2, told Retail Dive. Groceries is where retail is going to be won over the next five years. Yet, the e-commerce kingpin has been picking at grocery retail for about half of that time, signaling that legacy retailers could withstand the competition, if they also make the right moves. Grocery is poised for disruption, in much the same way bookstores were two decades ago, and Amazon has functioned as the great retail disrupter for two decades now. " Anyone can become a grocer, and Amazon has the benefit of having deep pockets, and most grocers don’t have that.” Grocery is ripe with opportunities," Brendan Witcher, Forrester analyst, told Retail Dive. It’s not passion purchases, it’s ‘my standards, my staples,’ so to some degree any time you remove the pain points you win. ![]() Most consumers look at grocery shopping as utilitarian. “They want that consistent customer back in the fold. ![]() As a high-frequency purchase, grocery makes a lot of sense for Amazon. But it’s not just the size of the market, analysts say.
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