Food and Money: Is Amazon Your Next Grocer?

by June 2, 2015
Photo via Wikimedia Commons user Visitor7

Photo via Wikimedia Commons user Visitor7

Online retailer Amazon became an international powerhouse when it moved on from its bookstore roots and began shipping other things like electronics, clothing and even food from its online store.

Now, Amazon is taking another step forward by selling its own grocery products.

The Wall Street Journal reported last week that Amazon is expanding its private-label brands to include perishable groceries and a wider variety of household products. The paper says the online retailer sought trademark protection in May for a number of items, including coffee, soup, pasta and vitamins, made under its Elements brand.

Amazon has reportedly approached private-label food manufacturers in search of a partner, including TreeHouse Foods Inc. of Oak Brook, Ill., which had $3 billion in sales last year.

AmazonFresh already sells and delivers grocery products to customers in Seattle, San Francisco, Los Angeles and New York, but it has never been involved in selling its own perishable goods before, according to the Journal.

AmazonFresh would be the logical marketplace for new products from its own brand and could be the center of its next profit-making venture. Despite its influence, Amazon has never been consistently profitable.

Last year, Amazon reported a $241 million loss on $89 billion in sales.

Speedy delivery has been a cornerstone in the Amazon model. It announced last week that members of its Prime program, who pay a yearly fee for free two-day shipping and other benefits, would have access to free same-day delivery on a number of certain items, The Washington Post reports.

The moves show that Amazon is serious about getting current and future customers to do even more of their shopping online.

Online grocery delivery is nothing new, as services like Chicago’s Peapod have been around for some time. But as Amazon’s reliable two-day and same-day delivery options continue to become available in more and more cities across the country, this could be one area that the retailer is already set to dominate as Americans expect faster delivery and on-demand services.

Groceries would also fit well into a brick and mortar store strategy, where buyers order online and pick up later at a nearby location. Amazon considered physical store sites earlier this year, as our own Micheline Maynard wrote on in February.

For story ideas, find some avid Amazon shoppers and ask what they think about the retailer’s expanding services. Of course, if Amazon is successful in this new venture, it could hurt local grocery chains.

Talk to grocers in your area and ask them how they’re adjusting to the changing landscape in their industry. You can order almost anything online and have it delivered to your home, even alcohol, so find a company to profile that’s having success delivering online orders.

STORY IDEAS

AmazonFresh

Peapod