When online behemoth Amazon recently launched its grocery offer it added to the general merriment in the food retailing community. [Here’s the Retail week editor’s blog on the matter].
It was almost as laughable as the valuation placed on Ocado. Certainly its regular customers thought it equally entertaining, judging by level of puns used in this forum.
Where to start:
1. It’s visually unappealing
2. The delivery charges are ludicrous
3. There are no timed delivery slots
4. The idiosyncratic range makes it unsuitable for people to do their weekly shop
But Amazon is a clever beast so it’s simply inconceivable that it could have launched something as bad as its grocery offer appears at first sight.
Consider when it started selling second-hand books (from third-parties) on its site alongside the more expensive new versions, it looked like commercial suicide.
However, it was a very clever move as it basically enabled the company to sell single products for a decent margin for absolutely no effort whatsoever and to keep the more profitable multiple-product purchases all to itself.
There must surely be something equally clever in its grocery offer. The answer could be that it is not really aimed at the consumer and that it is instead more targeted at the SME end of the market. It is therefore more of a threat to the cash & carry sector than the major grocers and Ocado.
When buying very specific products in bulk (where the delivery charge is largely immaterial) and you are not that sensitive to deliveries at certain hours then the Amazon offer might be a much more appealing proposition than it is to general consumers.
For consumers this is clearly one to watch rather than to buy from.