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Amazon will win because they will be able to compete on price and convenience. They don't have the massive overhead of the stores weighing them down. You're als

Amazon will win because they will be able to compete on price and convenience. They don't have the massive overhead of the stores weighing them down. You're also forgetting that many young people who work in economically relevant areas of the country don't have cars. Demographics will work against these legacy retailers and grocers. The elderly who are stuck in their ways and like physical stores will become less mobile while the younger generations would prefer more convenient choices.

HashHishBang 8y ago
Speaking as one of those people without a car: I've got a backpack. Grocery pickup is absurdly useful. You ever had a hiking pack to whoever is bagging or try and fill it while doing self-checkout? It's not bad in all honesty but it's still more annoying than just picking it up curbside. Plus the side benefit on not whipping some kid in the face with bag straps because I turned around too fast.
njarboe 8y ago
"They don't have the massive overhead of the stores weighing them down." Amazon bought Whole Foods a few years back.
- Kephael 8y ago
  Amazon is subsidized by AWS. I'm sure the vendor relationships and existing supply chain have value too.
Bartweiss 8y ago
> They don't have the massive overhead of the stores weighing them down. Is grocery store overhead avoidable for Amazon? Amazon's biggest wins have come in places where carrying costs are not just large but easily reducible. Books are heavy, bulky, and have extremely high product variety, so physical stores are large and require heavy curation. They're also stable, nonfragile, and open for artificially discounted consumer shipping via media mail. Amazon started there and won heavily because a warehouse in Omaha can win on variety and price nationwide. Clothes are bulky and high-variety too, with different sizes adding 3x to 10x multipliers on product count. Physical clothing stores generally involve large spaces (fitting rooms, backroom with stock), heavy employee presence (reshelving, customer service), and high loss (theft, damage). Online sales suffer from the inability to try things on, but clothes are stable, relatively nonfragile, and lightweight. Amazon parlayed cheap shipping into generous return policies and avoided all the other overhead. Large appliances are a similar story; highly varied, hard to stock, hard for consumers to take home, easy to store and ship in quantity. But groceries? They come with huge carrying costs, definitely, and making grocery stores presentable is quite demanding. But many of those costs are inherent. Frozen goods need to stay frozen; lots of produce is too unappealing to sell; bulk produce (e.g. broccoli) stays moist, needs to be investigated for decay before it spreads, and requires steady turnover; delicate produce (e.g. herbs, greens) can't be stacked or treated roughly and turns over incredibly fast. Further, much of it has to be sourced and distributed fairly locally - and god help you if you let mislabeled or fraudulent products into your supply chain. None of that dooms order-for-delivery groceries, but it means the pickers for those products will be going on-demand to a relatively local destination which looks relatively like an existing grocery store. There are efficiencies to be had like not needing prime "on the drive home" real estate and discarding checkout lanes, but it's nowhere near the same efficiencies as warehoused national distribution like clothing. What sounds more likely to me is an increasing split into three different classes of food sale. Stable bulk goods reward the centralized model with cheap carrying costs, whether that's CostCo or Amazon, and can be sold on price above convenience. Staple perishables (milk, lettuce, apples, etc.) get sold on demand with localized distribution where possible - we already see farmer's markets staying in business but including not-actually-local goods like bananas. And speciality goods get sold by dedicated retailers both in person and online; spices and hotsauce are already better bought online, while exotic perishables are best found at boutique stores that don't try to compete with chains on staples. There's plenty of room in all that for Amazon and delivery groceries, but no obvious market dominance like we saw in other fields.

HashHishBang 8y ago

Speaking as one of those people without a car: I've got a backpack. Grocery pickup is absurdly useful. You ever had a hiking pack to whoever is bagging or try and fill it while doing self-checkout? It's not bad in all honesty but it's still more annoying than just picking it up curbside. Plus the side benefit on not whipping some kid in the face with bag straps because I turned around too fast.

njarboe 8y ago

"They don't have the massive overhead of the stores weighing them down." Amazon bought Whole Foods a few years back.

Kephael 8y ago
Amazon is subsidized by AWS. I'm sure the vendor relationships and existing supply chain have value too.

Bartweiss 8y ago

> They don't have the massive overhead of the stores weighing them down. Is grocery store overhead avoidable for Amazon? Amazon's biggest wins have come in places where carrying costs are not just large but easily reducible. Books are heavy, bulky, and have extremely high product variety, so physical stores are large and require heavy curation. They're also stable, nonfragile, and open for artificially discounted consumer shipping via media mail. Amazon started there and won heavily because a warehouse in Omaha can win on variety and price nationwide. Clothes are bulky and high-variety too, with different sizes adding 3x to 10x multipliers on product count. Physical clothing stores generally involve large spaces (fitting rooms, backroom with stock), heavy employee presence (reshelving, customer service), and high loss (theft, damage). Online sales suffer from the inability to try things on, but clothes are stable, relatively nonfragile, and lightweight. Amazon parlayed cheap shipping into generous return policies and avoided all the other overhead. Large appliances are a similar story; highly varied, hard to stock, hard for consumers to take home, easy to store and ship in quantity. But groceries? They come with huge carrying costs, definitely, and making grocery stores presentable is quite demanding. But many of those costs are inherent. Frozen goods need to stay frozen; lots of produce is too unappealing to sell; bulk produce (e.g. broccoli) stays moist, needs to be investigated for decay before it spreads, and requires steady turnover; delicate produce (e.g. herbs, greens) can't be stacked or treated roughly and turns over incredibly fast. Further, much of it has to be sourced and distributed fairly locally - and god help you if you let mislabeled or fraudulent products into your supply chain. None of that dooms order-for-delivery groceries, but it means the pickers for those products will be going on-demand to a relatively local destination which looks relatively like an existing grocery store. There are efficiencies to be had like not needing prime "on the drive home" real estate and discarding checkout lanes, but it's nowhere near the same efficiencies as warehoused national distribution like clothing. What sounds more likely to me is an increasing split into three different classes of food sale. Stable bulk goods reward the centralized model with cheap carrying costs, whether that's CostCo or Amazon, and can be sold on price above convenience. Staple perishables (milk, lettuce, apples, etc.) get sold on demand with localized distribution where possible - we already see farmer's markets staying in business but including not-actually-local goods like bananas. And speciality goods get sold by dedicated retailers both in person and online; spices and hotsauce are already better bought online, while exotic perishables are best found at boutique stores that don't try to compete with chains on staples. There's plenty of room in all that for Amazon and delivery groceries, but no obvious market dominance like we saw in other fields.