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May 30, 2025
Should Andy Jassy Be Upbeat About Amazon’s Grocery Business?
On Amazon’s first-quarter analyst call, CEO Andy Jassy said he remains “very bullish” about the company’s grocery business, particularly its recent progress in figuring out how to sell perishables.
His remarks were called out in an Amazon blog entry.
In the Q&A section of the call, Jassy first remarked that the size of Amazon’s grocery business is often underestimated. He said, “If you look at our center of aisle things — so these are things like consumables, canned goods, pharmaceutical items, beauty products, really, everyday essentials — if I just exclude Whole Foods Market and Amazon Fresh, we did over $100 billion in gross sales in our grocery business on these items last year alone. So it’s a very significant business, and then I think we have a bunch of other areas that will allow us to grow in this area.”
He said Whole Foods, acquired in 2017, is “growing meaningfully faster than the grocery industry in general, with a really good profitability trajectory with the changes we’ve made over the last couple years and a great customer experience.”
The introduction of Whole Foods Market Daily Shop, ranging from 7,000 to 14,000 square feet compared to the typical 40,000 square feet, has also gone better than planned. He said, “Customers have really responded excellently to it.”
Whole Foods this past week opened its third Daily Shop in New York City, with more planned.
Jassy acknowledged that the Amazon Fresh banner needed a “broader, mass perishables offering” and has found some success with a revamp. He said, “We’ve been working on the second version of our physical Amazon Fresh stores, and those are showing meaningful progress in terms of what the performance looks like versus the first version of those Fresh stores.”
In early 2023, some Amazon Fresh grocery stores were closed, and openings temporarily paused as perishable sales underperformed.
Jassy added that at Whole Foods, “store within a store” concepts have been added to offer items the organic grocer traditionally hasn’t carried, “but that a lot of families want to shop when they do their weekly grocery shopping.”
He also highlighted a pilot project that launched last year, which involves building automated micro-fulfillment centers adjacent to Whole Foods locations. This test aims to allow Whole Foods shoppers to also purchase popular mainstream products from Amazon Fresh, as well as everyday essentials from Amazon.com.
Finally, he said Amazon has started adding a number of perishable items to some of its select same-day distribution facilities in Phoenix, Kansas City, and Orlando, and this has so far seen some “very promising” early success.
Jassy concluded, “So now, when you’re getting those items that you get same day, you can add perishables, like eggs or milk, or bread, or yogurt. That experience is really resonating with customers. We’re seeing very significant adoption, and I’m optimistic as we roll that out to many more of our same day facilities, that that will lead to more of our customers buying perishables from us.”
Discussion Questions
Do you see Amazon making progress with its grocery approach, particularly selling perishables at Amazon Fresh and via same-day delivery?
Which newer grocery initiatives hold the most promise?
Poll
Loading …BrainTrust
Carol Spieckerman
President, Spieckerman Retail
Kai Clarke
CEO, President- American Retail Consultants
Gary Sankary
Retail Industry Strategy, Esri
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There are two sides to Amazon in grocery. One is the dedicated grocery business via Whole Foods and Amazon Fresh. The other is general grocery, sold via the marketplace – which is mostly household essentials. The latter has been doing incredibly well as more consumers have migrated online thanks to convenience, sharp prices, and friction in mainstream stores. The former is more embryonic, and I do not think Amazon has fully cracked the physical grocery arena. Even Whole Foods has plenty of deficiencies and needs to strengthen the proposition. There is an opportunity here, but there is more work needed to actualize it.
That’s rather hard to believe, isn’t it? I have to think he meant if we include it, but’s lets move on: long-term – and God-only-knows what that term means for Amazon – the ultimate question that need to be answered affirmatively is “how much money does this part of our business make us?” As Paula relentlessly – but for good reason – points out, with Amazon’s cryptic and creative reporting, we can’t really answer that question.
Thanks for the call out. I’m glad people (or you, at least) hear me. I also relentlessly say that Amazon doesn’t know how to do Brick and Mortar. Of course people will buy “center aisle” stuff on line. Especially when brick and mortar stores have them now locked in prison (H/T to Neil again!). I mean, when I need deodorant, I’ll buy a 3-pack from Amazon because it’s (wait for it) frictionless. But their fresh stuff is a science project.
What does it mean that they’ve figured out perishables? They got refrigerated trucks? I find their web site incredibly hard to shop for fresh products. The lines are so bloody arbitrary between “fresh” and “standard.” For some reason, dried apricots are standard. Some other things (that I can’t even remember at the moment) are fresh and have a different delivery dollar amount threshold. So I am, indeed, highly doubtful.
Instacart is the winner when it comes to grocery home delivery, followed by Walmart, though I don’t love that experience either. Some of it is force of habit…it knows what I’ve bought before. Some of it is just convenience.
Amazon’s Annual Report looks like a throwback to term papers we used to do in college… on a portable typewriter; I don’t think there’s a single graph in the one I looked at – let alone a photograph! – and while I’m all for reducing fluff, I’m left more with the impression that they’re – he’s? – subtly telling us “you’ll get what we decide to give you…take it or leave it.” Over and over again we see breakouts between “North America” and “International”…what’s Canada? or Mexico? I realize there’s likely a footnote that defines the term(s), but why be that obtuse?
I don’t think Andy Jassy misspoke. He referred to shelf-stable food plus non-food categories like beauty totalling $100 billion. These packaged goods are much easier to transport than hot, refrigerated and frozen foods.
I have had students study Amazon’s grocery business. Their first challenge is that even Amazon does not know what it is. Is it home delivery? Are they stores? No one can tell because Amazon can’t tell a consistent story. So, NO. Jassy should not be upbeat about grocery. So far, as Paula noted in a comment last week, there has been no significant improvement at Whole Foods due to Amazon ownership and their other Amazon grocery efforts are considerably confused. There is no evidence Amazon has any unique insight into what they can do that is exceptional.
What we’re seeing here is what many expected Amazon would eventually do in buying Whole Foods. That is, integrating all kinds of learnings around grocery and applying efficiencies across multiple store banners, acting on ways for customers to save time, hassle and money. There is plenty more upside ahead in sales and profit for Amazon Fresh, Whole Foods, Whole Foods Daily Shop, and in the behind the scenes behemoth fulfillment machine. This is just the start of Amazon’s grocery business in planning, innovating, and operating at a higher level.
There seems to be a real dichotomy in Amazon’s physical grocery stores. Whole Foods is well-stocked and well-merchandised, while Amazon Fresh has a lot of empty space. The joke around our house is “if it’s in the ad, it isn’t in the store.” Associates are too busy picking orders to keep shelves stocked. Something has to give.
Amazon is simply trying to do different things in the grocery category and then see if they work. They are not a true competitor in grocery, or even close. They don’t have house brands for their grocery offerings, let alone stores which attract consumers to shop in their location because of their community, presence and other expanded offerings (like Rx drugs…). This is a wait and see proposition for Amazon, and we should also wait and see if it even remains viable.
Amazon is revolutionizing the shopping experience with cashier-less technology in its Amazon Go stores, where customers can grab what they need and leave without waiting in line.
The company has also expanded its grocery strategy by combining its logistical expertise with a growing network of Amazon Fresh stores and same-day delivery services, offering convenience and competitive pricing.
Additionally, Amazon is developing smart kitchen devices that connect with its grocery services, making it easy to restock pantry essentials seamlessly. These innovations aim to make grocery shopping more efficient and enjoyable.
Amazon’s grocery evolution proves it’s listening to and learning from consumers — especially by removing silos and friction.
Adding same-day delivery for perishables leverages Amazon’s logistics leadership so we can shop across all the categories on our grocery list. This will lead to more frequent visits, bigger baskets and deeper loyalty.
Allowing Whole Foods shoppers to also buy items from Amazon Fresh and Amazon.com integrates service across its grocery banners.
Looking ahead, the combination of Amazon Dash smart carts, product data and generative AI will give grocery shoppers more personalized store solutions.
I’m just not seeing the integration. Amazon’s various grocery concepts, including the items it sells on its marketplace, seem completely disconnected. I’ll disagree that Whole Foods hasn’t shown improvement under Amazon’s ownership. It’s gotten worse! My local Whole Foods is one of the worst I’ve visited. Empty shelves, inconsistent availability, and bizarre brand presentations (some categories are almost entirely private brands and it feels more scattershot than intentional). It looks like one of those lovely flagship locations is set to open nearby (or at least I hope it’s that version). Whole Foods seems like a missed opportunity at this point as does Amazon’s marketplace. I order a surprising (to me) amount of non-perishable food items from Amazon but finding them is often a chore. Amazon could really own non-perishable gourmet and hard-to-find items but for now, it’s a treasure hunt.
I’m reminded that Amazon hasn’t quite figured out grocery when I pass the empty and never occupied building, painted green and grey, that was supposed to be an Amazon Fresh store. They have a lot of work to do to be credible in grocery delivery. I’m not sure Whole Foods is the right vehicle to drive broad adoption of Amazon Grocery.
And while Amazon has been reinventing and testing, Walmart’s same-day grocery delivery volume has tripled in the last two years. The lesson I take from this- having a strong brick-and-mortar business enables a strong home delivery business faster than a strong delivery business enables a brick-and-mortar business.
Pop-up locations let FreshDirect test market demand and build brand presence without a long-term commitment. They are ideal for meeting seasonal demand, like summer residents in the Hamptons, but may limit customer loyalty and steady revenue compared to permanent stores.
Partnerships with delivery apps like Uber Eats can expand reach but bring challenges such as higher competition, lower profit margins from service fees, and less control over the customer experience. These factors can complicate timely deliveries and affect brand identity.
FreshDirect should prioritize its direct-to-consumer model by improving its online platform and delivery infrastructure. This approach ensures better customer experiences, builds loyalty, and reduces reliance on third-party platforms.