Shopping online isn’t a new phenomenon. In 2012, U.S. e-commerce sales amounted to $289 billion. That’s a lot of cash and a lot of people participating.
Amazon Goes Fresh
Amazon is one of the industry leaders when it comes to online shopping, and they are planning to expand their offerings by getting into the online grocery shopping business.
The new venture is called AmazonFresh, and currently it only services Seattle and Los Angeles.
AmazonFresh is available through the website or mobile app and allows users to browse the aisles of the grocery store without leaving the comfort of their home.
Both perishable and non-perishable goods are available and the grocery section has over 10,000 items offered. In addition to standard grocery products, AmazonFresh offers health and beauty items, pet food, apparel and more.
Once you decide what you would like, you can choose from three delivery options: Pre-Dawn (before 6 a.m.), Doorstep Delivery (during the day), or you can choose Attended Delivery and provide a specific 1-hour window that works best for you. And if you spend over $50 delivery is free.
Neat concept. But what’s the catch?
Aside from having to live in Seattle or Los Angeles, the service is only available to Amazon Prime members, and after your 90 day free trial expires, membership costs $299 annually.
Grocery is a low margin business by nature, and the model that Amazon is attempting to make successful with AmazonFresh hasn’t been successful before. They are using the $299 fee to dissuade too many people from signing up while they figure out how to establish a supply chain that will make this a profitable business. This slow growth model should help them avoid too many hiccups with a large customer base right out of the gate.
Want to try AmazonFresh?
If you don’t live in Seattle or Los Angeles, you can visit the website and download the mobile app to see how it works. Spectators are expecting to see AmazonFresh expand to San Francisco later this year and to 20 other cities over the next couple of years.
If Amazon is able to make a success of this model, local grocery chains and the big box companies will have to follow suit to be able to compete.
Would you buy your groceries online? What membership fee would you be willing to pay for this service?