I typically bring my own lunch to work, but today I must venture out in the masses to forage for nutrition. Yesterday’s bi-weekly, Monday-evening grocery trip was superseded by holiday shopping, of course.
Grocery shopping sucks and I hate it. I find few things as tedious as slow strolls through aisles of food, buying basically the same stuff week-after-week. And I don't live in one of the cool states that allows you to buy a 'walking around beer' as you shop.
Unlike most other forms of shopping, grocery shopping has been resistant to e-commerce, and for a variety of reasons. Traditional parcel carriers aren’t optimal because distribution centers aren’t close enough to get fresh food to customers quickly, and food might not survive the Tetris game of boxes in the back of a truck. Chilled goods also need insulated packaging, adding shipping expense.
With a few exceptions, grocery stores don’t typically deliver. This is because supermarket profit margins are extra-small (about 1%), and order picking by an employee and last-mile delivery add expenses that would make grocery delivery unacceptably expensive for the customer. As of yet, drones haven’t filled the delivery void, though they soon could.
What it takes to make e-grocery shopping a reality is a deep-pocketed, entrenched online retailer to provide a solution. Enter Amazon. Last summer, Amazon re-launched its Amazon Fresh service in eight U.S. markets, and continues to roll-it out in more areas as it invests in refrigerated warehousing and delivery trucks. There is a significant charge up-front, nearly $300, but after witnessing an Amazon Fresh delivery at my brother’s home last week, I say the convenience can’t be beat.
Users browse for their groceries on the Amazon Marketplace, and [reputedly] the prices are similar to or cheaper than a grocery store. Users pay online and select how they like their groceries delivered by dedicated Amazon trucks. Selecting a one-hour delivery window requires a person to be present to accept the delivery. Users who select three-hour delivery windows find insulated cooler totes on their porch awaiting them; the totes will be exchanged with full ones upon your next delivery.
Even under this current system, it’s hard to see Amazon Fresh profitable, at least to begin. But by starting Amazon Fresh now, they are the first to market as an online grocer, and are in an excellent position to move to a delivery chain of autonomous autos, drones, and robots once such a supply chain is possible.
Current competition to Amazon Fresh is meager. Safeway Inc., a regional, Midwest -based grocer, is the most established competitor and has offered online grocery ordering and delivery since 2002, but is a regional chain that only offers it on the west coast and in Maryland, Virginia, and Washington D.C. WalMart stores around the U.S. are beginning to offer online ordering, but customers need to pick up groceries themselves.
Amazon Fresh is just the tip of Amazon’s grocery initiatives. This week, the company also announced plans for 2,000 Amazon Go convenience stores around the U.S. These stores will feature Just-Walk-Out technology, which utilizes machine vision, sensors, and AI so customers never have to visit a point-of-sale. Instead, they sign in with their phones, select items, and then leave.
It definitely seems as though major changes to the grocery supply chain are impending, and if it can eliminate the regular grocery trips, or even just the order picking process, I will be forever grateful.
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