Amazon Expands Fresh Test
Based on the fact that it is expanding its coverage area, it would appear as though Amazon.com’s test of a grocery delivery service is going well.
AmazonFresh, as the service is called, has been quietly expanded in the Seattle area and the company’s pricing strategy and free delivery offers suggest it is serious about gaining market share. What isn’t known at this point is whether the company believes it has a viable model that can be rolled out in places other than its own corporate backyard.
According to a report on the Seattle Post Intelligencer website, AmazonFresh offers free bags of produce for first-time customers, and free shipping on orders of at least $25 or $50 depending on the time of delivery. The company recently added beer and wine delivery to its service. An adult consumer must be at home to sign for the order.
The service’s pricing is competitive, according to the report, with a gallon of reduced fat milk recently sold at 35 cents below Safeway.com. Interestingly, AmazonFresh operates out of a Safeway warehouse although the operation, including product, is totally separate from the grocer’s business. The Post-Intelligencer reports that AmazonFresh is running about a dozen trucks for the service first started in 2006.
Discussion Questions: What do you think Amazon is learning from its AmazonFresh test? Do you believe that the service has the potential to go national? What hurdles will it have to overcome to expand in major markets across America?