Saturday, June 20, 2015

Can Kroger, Safeway, Whole Foods, and Publix Keep Up with Amazon?

Amazon is not taking a back seat to any legacy grocery retailer when it comes to delivering groceries to consumers.  When Amazon decided to get into the grocery delivery business they first studied their competitors.  Amazon figured out that they understand the metrics of delivery much better than anyone else, they have more customers than any other grocery store, and their customer knowledge is excellent much better than any retailer in the world.

So this week when Amazon implemented modest adjustments to its grocery pricing structure for some customers of AmazonFresh, the service that delivers fresh groceries within 48 hours.  You knew they saw a competitive advantage once again. 
Up until now, Amazon customers had to pay a” flat $299 annual fee to use AmazonFresh, but now Prime members who live in certain ZIP codes in California can avoid the annual fee and instead pay $7.99 per delivery on top of the $99 Prime membership fee. Whether the consumer pays the annual or per delivery fee, the order qualifies only if it is above $50.”

This new pricing helps Amazon not only compete with Publix, Safeway, and Kroger but with other delivery services such as Postmates and Instacart, which offer per-delivery pricing structures.  Even if a Amazon prime member is not interested in the weekly service, this new option will allow them to order the ‘big-bulky’ items most ordered online the likes of toilet paper, paper towels, and heavy items like a case of beer without having to tote it home themselves. 

Success does leave clues and legacy grocery retailers should not expect Amazon to capitulate market its growing grocery market share any time soon.  Is your company ready for a Grocerant Scorecard?

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