If you live in Seattle, you’re probably familiar with Amazon Fresh, the e-commerce company’s same-day grocery delivery business.
Although Amazon Fresh has been around since 2007, it has never expanded beyond a few Seattle zip codes.
It’s an experiment that hasn’t gone any further.
And yet Amazon still appears to be working on a plan to roll out grocery delivery nationwide, according to a number of recent reports.
The logic seems obvious: Everyone eats food, every day. Food is a massive business. People like having food delivered. And as Amazon is in both the “massive” and “delivered” businesses, it seems like somewhere Amazon ought to be.
The problem is that groceries, unlike books or shoes, rot quickly. And that’s a logistics headache that Amazon has apparently not yet solved.
Here’s the company’s recent progress:
At Amazon’s annual shareholder meeting, CEO Jeff Bezos told investors he was still trying to figure out the grocery model, according to Geekwire:
“They have made progress on the economics over the last year,” said the Amazon CEO in response to a question during the meeting Thursday morning at Seattle centre. “They’ve been doing a lot of experiments and trying to get the right mixture of customer experience and economics. I’m optimistic that the team is making good progress.”
Observers were tipped that Amazon might be making more moves in groceries when they observed the company adding refrigeration equipment to distribution centres outside of the Seattle area.
The problem is that low-cost items don’t go very far toward paying for all that refrigeration, and a fleet of trucks, according to Forbes. Margins are razor thin:
It’s all about helping Amazon.com attain the scale to support its ambition to build a national same-day delivery shipping model.
Although no plans have been formerly announced, RetailNetGroup “strongly expects” AmazonFresh will expand to Los Angeles by June and San Francisco by October. Amazon has reportedly told vendors that it could roll out to 40 U.S. markets by the end of 2014. The report comes amid other reports that Amazon is adding refrigeration to some of its nearly 90 warehouses beyond Seattle.
And then there’s the environmental aspect. Grocery delivery is greener than the traditional method, according to DailyFinance:
Using a single vehicle to move multiple people (or objects) to a single destination (or to bring those objects to multiple people) is simply more efficient. It saves time, gas, and helps preserve the environment.
Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.
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