Online retail giant Amazon will now be rolling out one of the few services it hasn't yet really tackled but has apparently been developing for a few years. Along with books, DVDs, albums and other geegaws, you will now be able to buy your groceries over the Internet via Amazon.
One of the alleged reasons that Amazon hasn't gotten into the online grocery delivery realm until now is that it's a "low-margin business," as Reuters points out.
However, Reuters does go on to state in its report from Tuesday, June 4 that Amazon might be able to defy critics of the viability of online grocery delivery thanks to its capability to deliver "high-margin" products such as its electronics, as well.
Reuters references "two people familiar with the situation" as regards the company's AmazonFresh expansion, which will apparently include new warehouses for refrigerated food as well as storage space that will be able to hold as many as one-million sundry products.
For the past five years, Amazon has already been testing out its AmazonFresh service in its headquartered town of Seattle, Wash. where it has been employing its own convoy of trucks to deliver such fresh produce items as strawberries, meat and eggs.
Though they were not authorized to speak to Reuters, the two Amazon informants explained that the online company intends on expanding AmazonFresh from Seattle for the first time since it was first rolled out, and that said expansion should take place as early as this week in Los Angeles, Calif. The San Francisco Bay Area is likely next on the expansion list, with that taking place later this year.
In the event such expansion goes well, the two unidentified informants said that AmazonFresh may next move to 20 other "urban areas" in 2014. AmazonFresh may even make it abroad, should things go particularly well for the online grocery delivery branch of the company.
But what does this expansion into online grocery delivery mean for companies for which such business is literally their bread and butter?
"Amazon has been testing this for years and now it's time for them to harvest what they've learned by expanding outside Seattle," supermarket analyst and consultant Bill Bishop said.
"The fear is that grocery is a loss leader and Amazon will make a profit on sales of other products ordered online at the same time. That's an awesomely scary prospect for the grocery business."
Along with such mega-brands that sell groceries such as Kroger, Safeway and Whole Foods, the implications of AmazonFresh also may have a firm impact on delivery services such as UPS and FedEx, which already deliver Amazon products, especially as a component of the new service is the company's own fleet of trucks delivering directly to the homes of consumers.
All may not be lost for the likes of FedEx and Whole Foods, though, as some critics are pointing to reasons why these kinds of endeavors haven't worked in the past: Namely the fact that "fresh" food can't exactly be kept in a warehouse (even a refrigerated one) for long.
"Will it work? I would bet against it," erstwhile Wal-Mart executive Roger Davidson said. "The reasons these businesses have failed in the past have not gone away."
Ironically, Wal-Mart itself is possibly now underway with its own expansion into next-day-delivery and online grocery services.
"We are ready and able to expand grocery delivery in the U.S. as the market demands," Dan Toporek, a spokesman for Wal-Mart, said.
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