Amazon Tests a Home-Delivery Service For Groceries

destinyland writes "Amazon.com is quietly trying to resurrect the failed business models of WebVan and HomeGrocer — two dotcoms which had offered home delivery of fresh groceries — with a new service called Amazon Fresh. Last week at a shareholder's meeting, Amazon CEO Jeff Bezos fielded questions about the current tests being conducted in Seattle. Bezos admitted Amazon is 'tinkering' with the economics of it, adding that 'we continue to think about that...We like the idea of it, but we have a high bar of what we expect in terms of the business economics for something like Amazon Fresh in terms of profitability and return on invested capital.' No further details were forthcoming, but Bezos still acknowledged that 'we continue to think about that.'"

This isn't a new test.

[Anonymous Coward]

AmazonFresh has been around Seattle for several years. IIRC, Amazon bought out HomeGrocer and rebranded it.

It can succeed -- but it's a local business

[Artifice_Eternity]

Some packaged grocery items can benefit from national distribution and shipping, but lots of stuff -- produce, meats, cheeses, prepared foods, etc. -- need to be staged (and in some cases, sourced and/or prepared) locally, in a refrigerated facility, then delivered in refrigerated trucks. That means this kind of service will only be available in places where Amazon invests in infrastructure to support it. And that probably means denser metropolitan regions, where there's enough of a customer base in a small area to make the investment cost-effective.

There's a grocery delivery company called FreshDirect that services the NYC area; I've had good experiences with them. But they've been refining and building their business for years. Originally they only served certain neighborhood in Manhattan (their main warehouse is in Queens, just over the 59th St. bridge from midtown Manhattan). Now, years later, they have expanded to serve all 5 boroughs, and some areas outside the city. But this expansion was very slow and deliberate, as they built up their capacity, trained their workforce, etc.

Re:how many times

[vlm]

Amazon.com is quietly trying to resurrect the failed business models of WebVan and HomeGrocer

aka the same successful business model of peapod.com. Talk about trashing the service by carefully selected comparisons with failures. Disclaimer, I'm a very happy peapod customer, although I haven't ordered recently. When we had two newborns, medical issues, and an utterly packed schedule, it was a lifesaver (maybe literally, in terms of food quality vs the alternative of pizza delivery every day or whatever). I also greatly enjoyed shopping online vs in the store because of the "log in and work on the order for 5 minutes each day" ability. Also the experience of shopping while reading a cookbook, or at weird times of day, was oddly pleasurable.

can this idea fail?

About as many times as mom and pop restaurants fail, superficially the number is about infinite. I suspect you can realistically raise capital to do about one every couple years, and it'll be economically feasible to use diesel delivery trucks for only another decade or two, lets say another 10 times.

Re:how many times

[Xest]

Now, perhaps I'm missing something here, but I wasn't aware it had failed.

Is it's failure a US centric issue?

The reason I ask is here in the UK we've had home delivery for years, and pretty much every supermarket offers it.

It's highly succesful here and even Occado which is a home delivery only brand with no high street presceience I believe is even turning a decnt profit at last.

Perhaps companies in the US are just doing it wrong? I understand it'd be an issue in some parts of the US because of the distances involved, but certainly most of the UK is covered by such services and I see little reason why major population centres in the US at the very least couldn't have a similarly succesful model.

So is it just the US it's failed in? has it failed in other countries? In the countries it's failed in what were seen to be the causes?

Here's it's great, if you've got a busy week just order online during work and have it delivered in a 2hr timeslot such as say 8pm - 10pm one evening, even the next day, when you know you'll be home.

Bwuh? Old news?

[oGMo]

This has been running for nearly FOUR YEARS [seattlepi.com]. Way to be on the ball, slashdot editors. And as it's still running after four years, it isn't really all that failed now, is it?

Re:It can succeed -- but it's a local business

[cduffy]

I'm curious to see walking, transit and cab use mentioned but cycling left out; is utility cycling uncommon in New York? If so, could you speculate as to why?

My wife and I live in Austin and go supermarket shopping fairly regularly -- her with her handbuilt cargo bike (steel frame, belt drive; front basket, large rear panniers, large basket mountable above them), me with my Bike Friday Tikit (and, for Costco trips, a 200lb-capacity cargo trailer running behind it). Finding a secure place to store the trailer looked like it might be an issue when we were moving into our current condominium, but the former owner got a statement from the board that it would be welcome in the regular bicycle parking under the stairs.

Then again, here in Austin, I've never been more than a few miles from the nearest grocer -- though the HEB just a few blocks from our current location is somewhat limited on selection, the Whole Foods landmark and headquarters is in easy cycling distance for occasions when we need something more exotic (and neither objects to the Tikit being used as a shopping cart when wheeled around folded with its pannier open; at Costco, by contrast, I've made a habit of locking up the trailer in the copious and mostly unused bike parking and bringing the bike inside folded in my cart).