Amazon's Grocery Push Keeps Stumbling After Whole Foods Purchase (bloomberg.com)

Bloomberg reports that Amazon is struggling in the $840 billion grocery market, more than a year after it spoked the industry with the $13.7 billion acquisition of Whole Foods last year. "The number of Amazon Prime members who shop for groceries at least once a month declined in 2018 compared with 2017, according to the results of an annual consumer survey released Wednesday by UBS analysts," the report says. "The drop was surprising given the company's Whole Foods investment and expansion of two hour delivery service Prime Now, the analysts wrote in a note to investors." From the report: A separate study by research firm Brick Meets Click found that households using grocery delivery and pickup services from physical retailers spend about $200 per month and place orders more frequently than Amazon grocery shoppers, who spend $74 a month. The number of households with access to online grocery delivery and pickup options will reach 90 percent next year, up from 69 percent in 2017, thanks to big investments by food retailers of all sizes, the report states.

Comments

I need to feel those melons

[fluffernutter]

I just need to pick out my own groceries. Furthermore, grocery shopping is not at all unpleasant, and smart stores have interesting samples etc. Furthermore, the best stuff comes from the farmer's market.

Re:I need to feel those melons

[hawguy]

I just need to pick out my own groceries. Furthermore, grocery shopping is not at all unpleasant, and smart stores have interesting samples etc.

That depends on personal preference, I don't like to go to the grocery store at all, I'm happy to let someone else pick out my produce if it means that I don't need to set foot in the store.

I don't use Amazon for shopping though, I use my local supermarket's pickup service, I place my order online, then stop on my way home from work and they bring it out to the car for me.

Re:I need to feel those melons

[rtb61]

Which is why Amazon is struggling, there is a lot of competition in that market and once you are happy with your store, you tend to stick with it until they do something wrong. For me to change from Coles, it took those idiots, purposefully running down the number of check out chicks, so that you had to waitt 10 to 15 minutes to get served even in the middle of the day or use the self service check out. Well, the other alternative was to go to the competitors, seriously you want to give me shite service on purpose to force me to do what you want me to do, well, dropped going to their stores and ordered deliveries from somewhere else, that 20 odd minutes of forced waiting will cost 2 years of custom, minimum, already at the six month mark.

Look Amazon has a pretty shitty rep, abuse staff and staff are customers as are the people who know that staff and well, supermarkets of all sorts of brands are everywhere. So a reasonable, reliable job and you keep custom, fail and you lose them until their next supplier fails. Would I order groceries from Amazon, no until my current supplier screws up, why bother, the prices will be much of a muchness and it will be down to service and reliability. Amazon is about cheap and nothing else, they have nothing to sell in the grocery market, buy cheap, sell cheap is who they are and probably quality has taken a nose dive at whole foods in pursuit of cheap.

Keep in mind, people often chat with staff at grocery stores, it's a more personal shopping space, driving them to focus on store stuff and ignore customers, is guaranteed to lose you customers in that working space. Can Amazon with it's corporate nature ever do groceries effectively, probably not, it has no idea about person to person customer service.

Re:I need to feel those melons

[SuperKendall]

I don't like to go into the grocery store either. But there are so many things where I've never had a good experience letting any delivery service pick items for me, it almost assures the crappiest produce it would seem, or even things like the oldest possible loaf of bread... even when you are using the in-store shopping service where you'd think they would want you to use the service again.

I'm come to think that there just are not that many people working at grocery stores who know what good produce even is or how to check. They probably only train them as to what obviously bad looks like so they can change out stock, but picking out better examples... not sure most of them know.

Re:I need to feel those melons

[cascadingstylesheet]

Can Amazon with it's corporate nature ever do groceries effectively, probably not, it has no idea about person to person customer service.

Wow, really?

To the point that I'm willing to take more chances with them than others, since I know they'll make it right if something goes wrong.

Re:I need to feel those melons

[cascadingstylesheet]

Hmm, a paragraph disappeared there. Restored below ...

Wow, really?

I've used Amazon for ages (since they were just books, lol), and while I've rarely needed service, when I have, they've always impressed me as being super helpful and willing to just refund or replace things quickly.

To the point that I'm willing to take more chances with them than others, since I know they'll make it right if something goes wrong.

Re:I need to feel those melons

[scamper_22]

I don't know. There are often times I wonder if I just grew up with a certain mindset and now I'm stuck with that for life.

There are some things, I just don't buy online. Clothes, food, any large purchase. I also don't think I'll ever be comfortable with push button start cars, any kind of Alexa/Google home...

I go on an old man rant here, but I'm not even that old. I just don't see any benefit to this stuff. But at work, I talk to guys just 10 years younger and they're good with it all.

Really I have no reason not to get more stuff online. I tell myself I like to go to a place to talk to a person, but frig, anytime I have had an online purchase, the support has been great. Amazon has handled exactly 100% of my problems perfectly. What do I have to complain about that I don't trust them for large purchases or food? I also hate dealing with returns. or waiting on deliveries of things I really need/want now even though the few times I have, it was pretty smooth. I don't know. I just don't.

I just leave it open. It's probably more me that will always go to the grocery store. I think the next generation might be more willing.

Also Amazon might be cheap, but that has just never been their selling point for me. Convenience and consistency has been my reason. I've seen things cheaper online, but I'll stay buy it from Amazon because they're reliable and always have delivered. I'm sure they squeeze the crap out of vendors like any business and I'm sure they treat their employees harshly, but from a consumer point of view, they're solid. Not the best I've seen in the business (that goes to logitech), but pretty darn good.

how

[phantomfive]

How is this profitable? Are the major grocery stores doing this at a huge loss? It seems like delivery should add a hefty fee on top of the grocery bill.

Re:how

[belg4mit]

There are fees. Part of the problem Amazon has is that there are two separate systems, one Amazon-sourced and one Whole Foods-sourced. Foods show up from both when you're searching, and there's a minimum order for each as well, meaning that unless you're very careful or only want a very narrow set of things, you may end up having to spend $40 or more for each to complete your order, and then pay a tip to a separate drivers for the separate orders as well.

(Speaking from experience as I decided to try this system a few weeks ago when I was stuck in bed with a nasty flu for several days)

Re:how

[Actually, I do RTFA]

Most major grocery stores have a very thin margin, 2-3%. Whole Foods probably has a better margin. But they have a hefty delivery fee if you order under $35. So, that's probably just over a dollar. If they plan the delivery path well, that's probably right around the cost to deliver (esp. since they include a tip by default and the drivers are independent contractors).

Re:how

[bws111]

Clearly you have absolutely no idea what you are talking about. First, 'margin' is (revenue-cost)/revenue. Clearly, this number can never reach 100% unless the cost is 0, and it can't exceed 100% unless the cost is negative. Obviously, these two situations never happen in real life.

Second, acual industry profit (net) for groceries is between 1 and 3%. That is a very low margin. Gross margin averages around 10.5%. Average markup (at the retail level) is around 12%.

Here is one of many references for this: https://www.entrepreneur.com/a...

Whole Paycheck

[ugen]

Whole Paycheck, as we know it, is still as overpriced as ever. While they do have some products not available elsewhere, where they have exactly the same products to compare, their prices are routinely 30% above other stores.

Even a reasonably paid professional will find it hard to justify WF price premium (particularly when excellent groceries are available at several competing chains, esp. in our area thanks to "ethnic" chains moving in). As long as WF will remain priced as it is, I don't see it making any gains.

Anecdotally, I moved from buying 50% of my groceries at WF 10 years ago to virtually nothing (the only thing I buy there nowadays is bread)

Here's a way in

[John.Banister]

Delivery for high quality perishable products is hard. It shouldn't be the initial focus. One thing Amazon has is the customer reviews. I just searched for customer reviews of local produce and farmer's markets, and most of the front page links were to TripAdvisor with a few also to Yelp. So, here's what Amazon could do...

Free listings for non-taxable food where the delivery method is customer pick-up in a store smaller than 5000 sq ft, provided that the vendor sells at the advertised price, giving customers who bring an "I saw it on Amazon" QR code generated by the product page a 5% discount, and the code verification gives Amazon a report of those sales (which can allow the customer a "verified purchase" notation if they review the product). Vendors who rack up lots of sales with positive reviews are targets for deals that make their product carried by the nearest Whole Foods.

Local produce vendors get visibility.
Amazon gets leads for popular local products to carry in their stores and gets to condition shoppers to check their site when looking for tasty local food.
Customers get to learn where to obtain tasty locally produced food via an easy search, with reviews from other customers.

Re:Spurred some innovation though

[93 Escort Wagon]

Our local Fred Meyer got the makeover treatment about 18 months ago. I like that they’ve expanded their organic and natural foods section... that’s the only reason I ever go there anymore. For everything else, I shop at Winco - it’s closer, and their overall prices for the exact same stuff is usually 15-30 percent lower (guesstimating based on how much our grocery bills have gone down).

I took over the grocery shopping after my wife started having some health issues - and I’ve found I kind of enjoy it. Plus I really want to pick out my own produce and meat... So I can’t see us taking advantage of anyone’s delivery service, not just Bezos World’s.

Re: Spurred some innovation though

[Dunbal]

But at Whole Foods they're organic gluten free cookies and a bunch of hippies sang to the chocolate chips every day.

Spoked?

[q_e_t]

That's wheely bad spelling.

Yes but...

[SuperKendall]

I shop at both Costco and Whole Foods (and some other stores).

Each has strengths, there are some things only Whole Foods has.

Plus sometimes I don't want to get 24 heads of broccoli or 10 mangos, I just want two.

I will say that for fruits like raspberries and blueberries, Costco is really great - they do an amazing job with having pretty good quality and a quantity that while large, is not unmanageable and two people can actually eat in a reasonable amount of time.

Whole Foods is defniantely not my primary shopping store either though,