Amazon Subsidiary Gets Into Grocery Business

Discussion
Oct 25, 2011
George Anderson

Is there any category that Quidsi can’t get into? First, the wholly-owned subsidiary of Amazon started with Diapers.com and the later expanded into Soap.com, BeautyBar.com, Wag.com and YoYo.com. Now it is moving into the grocery business with the addition of 10,000 shelf-stable items on the Soap.com website.

"Our philosophy is to make our customers’ lives easier," said Marc Lore, CEO of Quidsi, in a press release. "We already carry a vast selection of health, beauty, and household essentials. Our customers have been asking about grocery since we launched in 2010. It was a seamless transition to offer a large selection of beverages, snacks and meal prep items for the whole family on Soap.com. Our goal is to continue to expand our product selection, and ultimately, help eliminate errands so our shoppers can spend more time doing the things they enjoy."

Grocery items carried by Soap.com will include coffee, tea, snacks, cereal, pasta, baking ingredients and canned items. As with all other orders made on Soap.com, consumers will get free one or two-day shipping, depending on location, for orders over $39.

Interestingly, with the move Quidsi is competing with is own parent company as well as all the other stores and websites that sell groceries. Ultimately, the fact that Quidsi might take some grocery sales away from Amazon should not be a concern, according to a GigaOm article, because it ultimately goes back to Jeff Bezos and company anyway.

The company, which was purchased by Amazon for $545 million in cash and assumed debt last year, had sales of $300 million in 2010, according to TechFlash.

Discussion Questions: Which website, Amazon or Soap.com, do you think is more likely to succeed with its online grocery service? What categories do you think Quidsi will expand into next?

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7 Comments on "Amazon Subsidiary Gets Into Grocery Business"


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Doron Levy
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Doron Levy
9 years 6 months ago

Amazon has such a hardcore following that it’s safe to assume that many of its shoppers would have no problem trying out the grocery end of it. As for Soap.com, as I just visited the site, I don’t see any prices on their home page. Strange, especially for what they are selling. The free shipping splashes are great but is the pricing actually competitive? I would have to click further to find out, and in this game you want to keep clicks to an absolute minimum. The browsing strategies that work in real life do not translate into the online world and, as far as I’m concerned, Soap.com has as serious signage problem. In terms of categories, Soap pretty much has everything covered and adding more would probably make the site look even busier that it already is. The real major I’m not seeing is wine and booze (where applicable by law).

Max Goldberg
Guest
9 years 6 months ago

It doesn’t really matter where consumers choose to purchase, Amazon shareholders win. It will be interesting to see how many and which grocery products consumers will be willing to purchase online. Internet history is littered with the wreckage of companies that tried to get into the grocery business.

Gene Detroyer
Guest
9 years 6 months ago

Marc Lore says it well. “Our philosophy is to make our customers’ lives easier.” That is what online retail is all about. And Amazon and friends sure do a good job of that. There is no question that the bulk of core-store grocery purchases are going to move online. For these types of products, there is no reason to go to a supermarket. Tide is Tide; does the shopper really have to look at the shelf, touch the product and make a decision?

Consistent with making it all easier, Soap.com has developed a logical landing place for such products. It has a more efficient purpose and will be easier to navigate than Amazon.com. This thinking is the brilliance of Amazon. They think about how best to service the customer first. Then they develop their activities to make the customer’s life simple.

David Biernbaum
Guest
9 years 6 months ago

Quidsi is the new category killer concept, on-line, that mirrors the late century concept of specialty stores in the more traditional sense.

Art Williams
Guest
Art Williams
9 years 6 months ago

In many ways, it would be hard to bet against their success based on Amazon’s track record, but as has been pointed out, online grocery has been tried by many and failed. However, as time goes by, more and more people are comfortable with online purchases and grocery should be no exception. Pricing will be a critical element as convenience alone I don’t think is a big enough draw. Plus, shoppers still have to use other sources for fresh and perishables, which detracts from the convenience significantly in my view.

I think it will take some time for them to make an impact. Will they have the staying power and resources to do that?

Matthew Keylock
Guest
Matthew Keylock
9 years 6 months ago

I like the move into grocery and see this having plenty of mileage. All these concepts are in their infancy, but it’s hard to see them doing anything other than growing and driving a greater competitive impact. It will be interesting to see how traditional players respond.

Anne Bieler
Guest
Anne Bieler
9 years 6 months ago

Amazon knows how to treat consumers to a good shopping experience with easy to navigate sites, useful adds, immediate help and more. As long as they stay consumer centric in their approach across their subsidiaries, it will grow here.

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