Amazon Fresh Keeps Expanding Despite a Decade of Disappointment

Amazon has been the grocery game for many years now, testing the waters in major cities and trying to figure out how it will fit into their e-tail jig saw puzzle. But 2016 seems to be the year that they have decided to take the plunge. Amazon announced today that the company will be expanding its Amazon Fresh service into Chicago and Dallas.

Just this year alone Amazon Fresh has started servicing Northern Virginia, Boston, Baltimore and London, while expanding their services in New York, Connecticut, Massachusetts, Pennsylvania, Delaware, Maryland and a few more regions.

Customers can use Amazon Fresh for just $14.99 per month as an add-on to their Prime membership. From Amazon’s perspective, growth in grocery initiatives has been terribly slow. The company started testing grocery deliveries way back in 2007, nearly a decade ago in Mercer Island, Washington.

Amazon.com, the Internet retailer known for its massive book sales, started delivering groceries Wednesday directly to consumers’ doorsteps on Mercer Island as part of a pilot program that’s expected to include pickup service in Bellevue and Kirkland.

“It’s just starting out, and it’s very small. We are in the early-stage beta test, and it’s a better way to serve our grocery customers,” said Craig Berman, an Amazon.com spokesman. “We are offering a great selection and great prices at a really convenient experience.”August 1, 2007

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Clearly it has been tough nut to crack for Amazon. The U.S. grocery market is now worth well over a half trillion dollars, but delivering them right at your doorstep isn’t something anybody has mastered yet due to the logistics involved in door to door delivery of perishable goods.

As you can see from the graph above, online grocery sales account for a very small percentage of the market, as consumers have somehow preferred to buy them directly instead of ordering them online. The market could be disrupted, but it has its own set of challenges that even Amazon hasn’t mastered yet.

One big problem is that grocery and freshness go hand in hand. For an e-commerce company to deliver groceries as quickly as possible is a logistical nightmare, and if you fail to deliver it on time then you will be shooting yourself in the foot. You have to be fast, you have to be accurate, the goods have to be super-fresh and you have to be ready to run multiple trips if required. The complexity and cost involved with delivering grocery is much higher than delivering electronic items or home care products, for example.

And to top that off, People do prefer seeing their fresh groceries before buying them. So, clearly, there are still plenty of issues to overcome for e-tailers to be successful in the grocery game, which possibly explains the slow-moving Amazon grocery train. But Amazon being Amazon, the company has apparently decided to keep at it until it cracks the code.

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