I've tried a bunch of different grocery delivery services (Seattle area) and Amazon Fresh is far and away the best of them. I stuck with Safeway for four months and literally every single time they delivered an order, there was a problem with the order. Every single week! There was always something missing (not even obscure stuff - once they claimed to be out of bananas, for example) and the packaging was terrible - just getting the bags from my front door to the kitchen often let to something falling out and breaking.
Amazon Fresh does things very, very well. They show up on time, almost never have a stocking issue and the packaging is very well designed - the frozen stuff is packed with dry ice, the cold stuff with an ice pack and the rest are packed into reinforced paper bags that are sealed to prevent stuff falling out en-route. It takes only moment to move everything into my kitchen and I've never had something break en-route.
Customer support is much better too - every time my order was missing an item, I'd have to call Safeway and often I simply couldn't reach someone (especially outside of 9-5).
Grocery stores need to up their game quickly or they will go the way of Sears and K-Mart.
As an aside, the amazon fresh packaging is great as trash bags. The ice packages they send along are great to put in your freezer and use later on trips. They recently (at least to me) added a durable cloth-based cooler, which they say you can put on your porch and they will reuse. I may let them have it back or I might use it as a cooler for my normal grocery store trips.
It is slightly more expensive, but the bottom line is that in the middle of the week I am just too worn out to go to the store, so being able to have a mid or end week delivery means that I have stuff at home instead of having to order out.
I guess I qualify as an amazon fanboy ;-)
Relevance to this HN story, I think they can probably leverage this to help their Amazon Fresh business.
- Amazon has been shipping tens of thousands of non-perishable grocery SKUs from their main site for about 10 years. They've had to deal with expiration dates, chocolate that can melt, bundling multiples, highly variable shipping cost vs margin, etc. That organic cereal you buy at WFM is available on Amazon too.
- They have relationships with all the large packaged-goods companies.
- They've been operating a small-scale local grocery business (Amazon Fresh) for about 10 years, now in 14 cities.
- A lot of this direct-to-consumer business is complementary to Whole Foods' experience.
Whole Foods is stable as a company and (afaict) has higher operating margin's than Amazon's retail business. So they could largely leave them alone but still gain a more-or-less national perishable foods supply chain that lets them open Amazon Fresh and Amazon Go in many more cities much faster than if they had to do it from scratch.
Looking at it the other way: Amazon knows it's bad at this, so it's acquiring the expertise.
at any other grocery store, yes
Whole Foods gets higher margins because their customer base cares more about various intangibles beyond just the value-for-money. Take those intangibles away and suddenly you're competing on value-for-money alone and Walmart will eat your lunch while smaller, independent grocers go after your dinner.
Very much, like many premium businesses part of what they are is to ensure everything will be lovely, easy, and just happen. That is the added value. Take that away and you're competing against ASDA etc. Premium brands need to keep that, it is a very valid market but must be looked after.
Amazon made its name by shipping consumer hard goods. It continues to do well with non-perishable items. But this nut is the Everest of retail. It will be a challenge to get it to fit into their model.