Amazon brings farmers market goods to Prime doorsteps
If Amazon and start-up partner Fresh Nation are successful with tests of their new Farmers Market Direct service, consumers across the country may soon be spared the joy of visiting their community-based bazaars.
Farmers markets (nearly as old an institution as farms) may be the original experiential retail format. People go for the summer breezes, the aroma of ripened fruit and fresh cheeses, the sun-weathered faces of the farmers, and to say "hi" to neighbors (and pretend to appreciate their neighbors’ dogs). And yes, access to presumably fresher/healthier produce and artisanal products is also a huge motivator, even when prices are not necessarily better than at local stores.
Given the sensual and social allure, how then does the appeal change when farmers market produce becomes available for home delivery via the web? The question is being explored in the Southern California rollout of Farmers Market Direct, the brainchild of Tony Lee and his Connecticut-based company, Fresh Nation.
Mr. Lee’s aspirations, it appears, have been Amazon-sized from the get-go. He reportedly began by spending about a year compiling a national database of farmers markets and vendors. Tests followed in Southern California and on the East Coast. Once he felt ready, Mr. Lee took the idea to Amazon, which by that point had AmazonFresh off the ground.
Source: Farmer’s Market Direct
Amazon, already gaining valuable experience delivering perishables with AmazonFresh, has worked out a neat delivery system using oversized, reusable bags that accept slim Styrofoam inserts to keep fresh foods cool and cushioned. And yet getting fresh produce delivered to homes in good shape within 36 hours of harvesting is a daunting challenge.
"That’s the problem we were trying to solve," Mr. Lee told the Los Angeles Times. "How do you get fresh local food every day that’s as easy as buying supermarket food?"
To tackle the challenge, Fresh Nation works up a demand estimate and places orders with vendors. Personnel then head out to the farmers markets where they package up the individual orders, thus taking advantage what Mr. Lee sees as "a very efficient distribution center for fresh local food in all the main urban areas." The orders are transported in refrigerated trucks to the Amazon DC in San Bernardino; then distributed in Amazon trucks to homes.
To receive deliveries, according to the LA Times, customers must be enrolled in the Amazon Prime Fresh program that currently comes with a $299/year membership fee. Customers can buy individual items or — in the style of grass-roots food coops — choose to receive "baskets" of assorted fruit, vegetables or both for $59 (large) or $39 (small).
The rollout is currently underway in Los Angeles, Orange and San Diego counties with plans to shortly test-launch in New York City before planning further expansion.
Discussion Questions
Do you see a major business opportunity in the new Farmers Market Direct venture? What do you see as the biggest challenge facing the service: quality control, logistics, supply/demand balance? If rolled out nationwide, how might it affect the business of farmers markets and vendors?
Poll
BrainTrust
Not a huge opportunity, but perhaps a decent niche in urban areas for people who haven’t the time to shop or who prefer not to deal with the crowds. Logistics will likely be the biggest challenge, especially in those urban areas. Parking tickets have cost Fresh Direct millions in the NYC area since it was founded. If rolled out nationwide, this concept would go bankrupt unless it stuck to cities/markets with critical mass. It wouldn’t work in rural areas economically, and besides, those of us in the country really enjoying catching up with friends, farmers and even dogs during regular weekend visits.
People love farmers and farmers markets. Farmers are the top respected profession. Therefore an opportunity to conveniently acquire these products year-round is an attractive option to this target market.
As noted, quality control and logistics will continue to be a challenge. However, with the backing and experience of Amazon, these challenges may be short-lived.
Quality control is a huge issue. The tomatoes in the picture are not ones you would find at a real Farmers Market. Hey, some people will buy anything and that is the strategy at Amazon. Try it — someone will buy it. A bit extreme, but that is Jeff’s style.
Great idea — WHEN you can get the product. The struggle on local produce gets to breadth and availability of assortment. Brick-and-mortar grocers have often left these supply relationships to store and regional managers, effectively distributing the administration — not sure how Amazon intends to handle it. But as a clever augmentation strategy, it should work well.
Amazon, through its partnership with Fresh Nation, is filling a gap that large chain grocers are letting slip past them. Amazon quite accurately identified that the “buy local” movement represents a significant opportunity for food retailers.
Precima surveyed 1,000+ American shoppers in August to see just how important local foods are for consumers. The survey found that 85 percent of shoppers say buying local products is important to them, and more than one-third are willing to pay a 15 to 30 percent premium for local items. In addition, 82 percent report they would increase their monthly grocery spend if local alternatives were more readily available.
However, more than 40 percent of those surveyed said large retail chains do a poor job at stocking and promoting local products. In fact, of the shoppers who said that they did not buy local products, price wasn’t driving factor. It is a merchandising issue — 42 percent said, “I don’t have time when I’m shopping to distinguish between local and non-local food and products,” and 35 percent said, “There is less variety of local products compared to non-local.”
Sourcing local is only part of the puzzle — it’s how you present the value that is going to make the real difference. If Amazon is able to use their data to structure their pricing, merchandising and promotions to align with the value consumers place on local products, their partnership with Fresh Nation should flourish.
Seems to me that a vast majority of consumers love to pick their own produce, so this will appeal to a relatively small group. The $299 annual fee for Amazon Prime Fresh will further cull the herd. And then there is the environmental unfriendliness of Styrofoam. I wonder if even Jeff Bezos can keep up with all the experiments Amazon has underway.
I see the quality control being a big problem here. Not only when the item is packed, but how to ensure the items are maintained during transport to the end destination. What happens if it arrives and all your tomatoes are tomato sauce? You can refund or replace, but the customer needs it for dinner.
I am normally a big proponent of Amazon’s innovation. This Farmers Market Direct seems to be a stretch way too far in terms of scalability.
Others have legitimately noted the huge logistical challenge of delivering vine ripened produce in an acceptable condition. While Styrofoam may be efficient packaging to protect the produce, it is not exactly eco-friendly or consistent with a “healthy” environment.
The even greater challenge will be supply of quality produce. Local supply of fresh produce is highly variable and susceptible to host of conditions that farmers do not control. What happens when demand exceeds supply … particularly at the start or end of a local growing season?
Regarding the issue of quality, much of the produce in local farmer’s markets have “blemishes” that would not be acceptable on the grocer’s shelf. Will consumers accept blemishes and irregularities when paying $299/year?
However, Bloomberg just reported that Google has jumped in and is also testing a fresh food grocery delivery service. If I’m a local farmer, the opportunities to sell my product suddenly look brighter (at least in large metro markets).
If I’m a local grocery store, this is a HUGE wake up call to the rapidly changing purchase patterns of omnichannel consumers. If consumers will trust Amazon to delivery vine ripened tomatoes, everything is up for sale online!
Again, a good idea in a high density population area. The only issues will be price, freshness and drop-off mechanics. Some issues that have been dealt with in other fresh food delivery schemes.
I think the overall traditional farmer’s market concept need not be worried about this endeavor.
There seems to be two motivations (beyond taste) to buying local. The first is a vote against industrial farming (The Omnivore’s Dilemma) and a desire to support local business, and the second relates to those things that connect with being a Foodie (less socialist, more food lover.)
I’ve seen these two groups in action at a farmers market and the foodie tends to be more affluent and time starved to a point where they don’t really connect with casualness of a farmers market. They don’t want to talk, they just want their favorites.
There’s another audience of food-lovers who lack the motivation to shop at farmers markets and who are challenged by seasonality (especially where micro-climates can alter the peak times to buy) let’s call them Foodie-lites, or people who don’t have the same hobbyist zeal to stay on top of things like the impact of an early frost. These are the people who have favorites and then lament that the peak moment has come and gone.
Then we might include the lifestyle changer who is a supermarket shopper that because of a health or attitudinal wakeup call, wants to adopt health lifestyles but is at square one. This could be a great way for them to change their diets and tune their purchases to avoid wasted food.
Then there are restaurants/kitchens. Perhaps that might be a separate business channel and chefs may prefer this approach—I am not sure.
In every case, the food must be better than what can be purchased at Whole Foods. That means delivering goods picked the same day.
The farmers win, the farmers markets may actually win as an unintended consequence of more people discovering the great taste of farm fresh.
I see both silliness and a big potential for failure and waste with respect to this venture. Most of us who enjoy getting up early to go to the local farmers market are not professional cooks and foodies. We do it because we want to look at, sniff, and pick out our own fresh-from-the-farm produce from among the “pickins.” And we go for the environment because we want to interact directly and personally with the farmers (or farmer’s rep) who is manning the booth. Sometimes the farmer points out and discounts any wonderful and still usable but slightly blemished or ripe-ish produce at his booth, which makes the personal transaction even better for both him and the purchaser.
Replace the stroll down the rows of stalls, samples, smells, colors with a browse on your cell phone? Not the same experience. It may be a source of better quality fruit and vegetables (instead of the grocery store), but it’s not a replacement for the experience of shopping the farmers market, and impulse buying whatever looks good that day.