Dive Brief:
- According to reports Amazon is building three grocery pick up facilities on the West Coast, as the e-commerce giant moves to capture another profitable logistics market.
- A Forbes investigative report says the new facilities will operate on a 15-minute to two-hour pickup schedule as customers place their orders online and receive goods at a predetermined location.
- The new facilities threaten to disrupt the grocery retail industry much in the same way the e-commerce giant has disrupted other industries: the online selection of goods allows Amazon to skip the exhibition needs of retailers while acting as a direct-to-consumer logistics provider for suppliers.
Dive Insight:
Amazon's product offerings have long included groceries, but at the checkout phase delivery options still require several days wait.
To avoid the wait, customers in select locations can subscribe to Amazon Fresh for an annual membership price, but Tech Crunch reports the service is hardly competitive.
Meanwhile, grocery retailers with online shopping capabilities often offer same-day delivery or on-site pick up options of the select goods. In many ways, grocery retailers' consistent supply of goods, brand appeal and wide range of locations that could serve as distribution centers allow an advantage.
Yet Amazon's expansion to the grocery business is more than an increased focus on a weak market offering; it is an application of a successful business model (Amazon Locker) that promises expedited delivery while avoiding the challenges of home delivery that often slow logistics services.
It remains to be seen whether the new offering will prove successful over current online grocery retail offerings. However, even if unsuccessful, the move provides entry into the expedited grocery market that will allow Amazon to expand its logistics capabilities to include cold chain transport — and set the company up for further expansions as an e-commerce/logistics mogul.
