Amazon Tests a Home-Delivery Service For Groceries

destinyland writes "Amazon.com is quietly trying to resurrect the failed business models of WebVan and HomeGrocer — two dotcoms which had offered home delivery of fresh groceries — with a new service called Amazon Fresh. Last week at a shareholder's meeting, Amazon CEO Jeff Bezos fielded questions about the current tests being conducted in Seattle. Bezos admitted Amazon is 'tinkering' with the economics of it, adding that 'we continue to think about that...We like the idea of it, but we have a high bar of what we expect in terms of the business economics for something like Amazon Fresh in terms of profitability and return on invested capital.' No further details were forthcoming, but Bezos still acknowledged that 'we continue to think about that.'"

Comments

People want to know

[pompetti]

Will they deliver Tuscan Whole Milk?

Re:People want to know

[Beardydog]

They'll deliver Mexican Coke...

It can succeed -- but it's a local business

[Artifice_Eternity]

Some packaged grocery items can benefit from national distribution and shipping, but lots of stuff -- produce, meats, cheeses, prepared foods, etc. -- need to be staged (and in some cases, sourced and/or prepared) locally, in a refrigerated facility, then delivered in refrigerated trucks. That means this kind of service will only be available in places where Amazon invests in infrastructure to support it. And that probably means denser metropolitan regions, where there's enough of a customer base in a small area to make the investment cost-effective.

There's a grocery delivery company called FreshDirect that services the NYC area; I've had good experiences with them. But they've been refining and building their business for years. Originally they only served certain neighborhood in Manhattan (their main warehouse is in Queens, just over the 59th St. bridge from midtown Manhattan). Now, years later, they have expanded to serve all 5 boroughs, and some areas outside the city. But this expansion was very slow and deliberate, as they built up their capacity, trained their workforce, etc.

Re:how many times

[vlm]

Amazon.com is quietly trying to resurrect the failed business models of WebVan and HomeGrocer

aka the same successful business model of peapod.com. Talk about trashing the service by carefully selected comparisons with failures. Disclaimer, I'm a very happy peapod customer, although I haven't ordered recently. When we had two newborns, medical issues, and an utterly packed schedule, it was a lifesaver (maybe literally, in terms of food quality vs the alternative of pizza delivery every day or whatever). I also greatly enjoyed shopping online vs in the store because of the "log in and work on the order for 5 minutes each day" ability. Also the experience of shopping while reading a cookbook, or at weird times of day, was oddly pleasurable.

can this idea fail?

About as many times as mom and pop restaurants fail, superficially the number is about infinite. I suspect you can realistically raise capital to do about one every couple years, and it'll be economically feasible to use diesel delivery trucks for only another decade or two, lets say another 10 times.