THE RETAIL BULLETIN - The home of retail news
Department Stores
Shopping Centres & Retail Parks
Home & DIY
Health & Beauty
General Merchandise
Sports & Leisure
The Papers
Retail Solutions
Food & Drink
AmazonFresh will introduce two major online grocery innovations

The Retailbulletin and ResearchFarm have teamed up to bring you an insider view into Amazon.


AmazonFresh will introduce two major online grocery innovations

The Retailbulletin and ResearchFarm have teamed up to bring you an insider view into Amazon.

Daniel Lucht of ResearchFarm writes that AmazonFresh should be seen in the context of the logistics build out in the US. According to many analysts the main driver behind the Fresh roll out is to encourage cross shopping across categories. By offering fresh groceries combined with the updated prime membership and same day delivery, Amazon will enable shoppers to order their bananas and bread at the same time as a new flat screen TV. While there is merit to this logic - and over the long term much of the future of Amazon’s grocery business should play out like this - we believe it’s not the whole story. Especially at the moment, as Amazon is rolling Fresh out carefully city by city, this comprehensive offer of combined groceries and non food orders is still years away from being available to most shoppers.

You can order the report here ( and receive a special 10% Retail Bulletin discount.(Remember to put the word bulletin in the discount code box).

Simply put for now, the attraction of fresh groceries to Amazon is slightly different. Only with the basket sizes and shopping frequency achievable through the Fresh offer will the retailer be able to make the logistics set up work profitably. Fresh baskets contain more than 20 times the items of the standard Amazon basket, while in value terms they are on average more than twice the size. In Seattle AmazonFresh shoppers used the service on a weekly basis, five times more often than the average frequency on the regular Amazon site (we provide the relevant data points in our report). Seen in this light, Fresh becomes a central linchpin to the logistics setup, and in combination with proprietary logistics and prime, Fresh will drive basket spend and frequency and tie the most loyal and highest spending customers closer to the retailer. Fresh then justifies the huge risks and investments into the FC build out, vendor flex, kiva, proprietary Amazon logistics and same day and Sunday delivery.

While Fresh’s ROI will take time to materialise, because online grocery is hard to operate profitably, even for Amazon, the opportunity for the development of the Fresh service is much bigger than driving cross-shopping alone.

The innovations AmazonFresh could eventually introduce into online grocery are twofold. First, AmazonFresh would become the first online grocery marketplace operator at scale and Amazon always functions best as a business when it is operating at scale. If successful, this would herald a true revolution in online grocery shopping, the next step in the journey in the development of the sector.

When one looks at the transformation the online marketplace model has forced on retailing as a whole over the last decade, the potential of such a move in grocery should become evident. Most readers will remember newspaper stories about the first eBay seller millionaires, and something similar could happen in the grocery sector, facilitated by AmazonFresh with artisanal bakers, farmers and others the likely candidates to really drive top line growth. Amazon would then enable small scale, independent high street greengrocers, butchers and organic foods stores to widen their reach through the online channel and serve both new shoppers and their existing loyal shopper base across channels, capturing more of their spend and share of wallet.

Amazon would cut out today’s inefficiencies in grocery shopping by offering a platform for shoppers and sellers to meet and do business, especially in cases when this would be difficult to achieve in the bricks and mortar world due to physical location, distances and drive times. Amazon would of course sit in the middle of this ecosystem, and charge its fees.

Second, the other major innovation Amazon could introduce into online grocery is utilising the physical footprint and logistics build out for Fresh to run a marketplace for takeaways and basically copy the business strategy and success of Just Eat and Delivery Hero but add their own logistics infrastructure. Such an offer would provide an integrated delivery solution of fresh groceries and ready-made meals sourced from 3P food service players from a single touch point. Amazon is already offering a similar service in Seattle called Spotlight.

Just as any other business, Amazon get things wrong from time to time and Fresh is perhaps Amazon’s boldest bet yet - on the biggest category in retail. To be on the safe side, we would advise retailers and manufacturers to assume that the dynamics in online grocery retailing will be transformed and formulate their strategies in response, rather than just ignoring Bezos’ next vector of attack.

To view the brochure, click here

To order the report and claim an exclusive 10% discount for Retail Bulletin readers, enter the code ‘bulletin’ on the check out page.


Email this article to a friend

You need to be logged in to use this feature.

Please log in here

Subscribe For Retail News


Customer Engagement Conference 2019
Customer Engagement Conference 2019
5 June 2019
Cavendish Conference Centre, London W1
The 10th Annual Retail Customer Engagement Conference
The HR Summit 2019
The HR Summit 2019
8 October 2019
Hallam Conference Centre, London W1W 6JJ
The 11th HR Summit 2019, Hallam Conference Centre, 44 Hallam St, Marylebone, London W1W 6JJ
AI in Retail Conference 2019
AI in Retail Conference 2019
16 October 2019
Cavendish Conference Center, London W1G 9DT
Digitally native competitors and demanding customers are forcing a new perspective in retail. AI and machine learning can help you step up to the challenges; and some ‘small and beautiful’ solutions can increase your conversion rates within just a few weeks.
Omnichannel Futures Conference 2020
Omnichannel Futures Conference 2020
5 February 2020
Cavendish Conference Centre, London WG1 9DT
A truly omnichannel offering requires an understanding of customer behaviour across all shopping channels and how this should impact your overall business strategy