Amazon Offers Lots of Slow Food Online
By George Anderson
The prices are good. The selection is fairly broad. Delivery times will not be for the time pressed.
Those are the basic pros and cons of Amazon.com’s expanded Gourmet (or not) Food section on its web site.
According to an ABC News report, the Amazon site has 84 pages of food (roughly 2,000 packaged food products) with everything from everyday fare to the exotic.
According to another report, this one from the Financial Times, Amazon shoppers can buy Campbell’s Beef and Rice Chunky soup for $1.57 a can. The same item sold through
Peapod costs $2.69. Of course, Peapod customers can get the product within a day of ordering while Amazon shoppers may have to wait five weeks.
While Amazon is not looking to compete with other online food sellers in terms of delivery time, it does seem focused on using price as a vehicle to entice consumers that the
wait is worth it. In addition to low product pricing, the online giant is offering free delivery on most grocery orders over $25.
Moderator’s Comment: What roles do price, selection and delivery time play in online grocery product purchasing? Which factor is most important to consumers
who buy food online? Which factor most discourages those who do not shop for food online from doing so? –
George Anderson – Moderator
As the Financial Times said, online grocery shopping is much more user-friendly and popular in the UK than the US. Which isn’t to say that the biggest of them all, Tesco, gets it right as often as they should. Still far too many late deliveries and poorly selected substitutions. But Ocado, my regular, is damn near infallible. And they generally give me a bottle of wine or some other nice gift to keep me sweet. On the rare occasions when things go wrong, they are unquestioning about making it up whereas my friend ordered from Tesco for a vacation trip, had the order cancelled at the last minute and was forced to break into her trip (on a boat, so no easy way to a supermarket) to try and find something to eat. She never did get any sort of satisfactory apology. What we like here is reliability. As for Amazon, I can’t see their bulk buys being overly popular but as for gourmet food gifts, there they probably have an opportunity. I know I use them for precisely that.
Since consumers today are seeking alternate ways of managing household duties, the Amazon offering presents another interesting option for keeping one’s food pantry stocked with both standard and unique packaged goods options, whether they be found at the traditional brick and mortar grocery location or with the local on-line grocer who provides delivery within a day. However, I believe the gift/care basket aspect of this offering perhaps has the greater potential to drive business. Certainly it may cause me to give this service a tryout. Being able to send the well-appointed “care package” to the college-bound students in my immediate and extended family would be a winner in my household.
Amazon will ultimately take marketshare from traditional brick and mortar operations in the drygoods/snack/organic/gourmet/beverage categories.
They can offer free shipping and relatively quick turn around time on orders that should satisfy that ever busy customer. Add with the rising costs of fuel, now more and more customers will be willing to shop Amazon for consumable shelf stable items.
Also, speciality items, organic foods, and other hard to find products will be easily found on Amazon.com. Long term, this will be yet another part in the Amazon story; the company that ultimately wants to be able to offer everything under the sun to their customers. Watch out for the next phase of this venture…..
On-line groceries delivered: almost a sure way to lose money. The margins are low, the free delivery offer is ruinous, and the pick & pack labor is costly too. If customers like the prices and selection, they should buy now because money-losing giveaways don’t last long.
If it makes a profit, why not? But I don’t see it getting beyond niche, especially for soup and cornflakes. Given the pricing, I could see some small, misguided entrepreneurs ordering from Amazon for resale. Stranger things have happened. Better potential here for specialty items that are hard to find in brick and mortar locations, and tying it to a gift service where it’ll ship automatically to your list of family/friends on birthdays and anniversaries.
In the halcyon days of internet grocery retailing, Netgrocer out of New Jersey did much the same thing with staples and selected hard-to-find items – and I recall talking to them and discovering that one their best sources of business was “care” packages sent to service men and women overseas who wanted a touch of stuff from home.
Success factors for online grocery? Accurate and time-saving searches, particularly for ethnic and gourmet items. Amazon’s greatest weakness with what was called “gourmet beta” forever? Accurate and time-saving searches. I stopped using the sub-site after pulling up one too many irrelevant items and weeding through pages and pages of products that had nothing to do with my searches, regardless of how specific. Amazon needs to organize their virtual shelves if they want to be a player.
Amazon’s deeper foray into food is predicated on the company’s belief that they can sell anything found in a conventional drug store. As noted by others commenting on this issue, Amazon needs to deal with internet issues of product presentation and search. However, I am more sanguine about them doing a better job in this area than traditional retailers who launch an internet shopping site.
The issue on internet food shopping still comes down to who will pay for two key food shopping activities currently paid for by consumers, namely, the picking of products and delivery to the home. Amazon is ahead of the curve on both of these tasks and understands customer intimacy. Amazon’s food options represent another “paper cut” for traditional food retailers. While no one ever died of a paper cut, they are painful and enough of them can result in significant loss of blood.