Amazon to Deliver Online Grocery Business
US online retailer Amazon is planning a major expansion of its grocery delivery business, AmazonFresh. According to London-based news agency Reuters, the online retailer has been quietly offering the fresh-food delivery service to customers in Seattle for the past few years, but is now expected to launch in up to 20 new regions by 2014.
Last year, the US grocery sector generated $568bn in retail sales. Reuters’ report suggests that Amazon is searching for new large-scale markets to enter following its soaring growth rate, with shares increasing 220% in value over the past five years. Groceries are typically a low-margin business, but analysts believe that Amazon will team groceries with more lucrative products such as electronics.
Seattle’s AmazonFresh service currently offers overnight delivery of food from a variety of local food retailers. With its own fleet of trucks, delivery fees are between $7.99 and $9.99, while sufficiently larger orders are free of charge.
If the expansion goes ahead, Amazon will be competing with traditional US grocery chains such as Kroger and Whole Foods, as well as supermarket giants like Walmart, which is currently testing an online same-day delivery service in the San Francisco Bay area.