Amazon scales back Fresh deliveries
Amazon.com’s acquisition of Whole Foods in August led many to speculate that the move would serve as a jumping off point for the company to expand its AmazonFresh delivery service. Instead, reports surfaced last week that Amazon sent notices to customers that it is ending home delivery of groceries in some areas.
The e-tailer e-mailed customers within certain zip codes in nine states — California, Connecticut, Delaware, Maryland, Massachusetts, New Jersey, New York, Pennsylvania and Virginia — that the service was being discontinued.
An Amazon spokesperson confirmed to Recode that the company will end the service in some places, but said it would continue serving other neighborhoods in cities including Boston, Chicago, Los Angeles, New York and Philadelphia. Amazon did not offer insight as to whether it intended to return in the future to areas where it is ending AmazonFresh deliveries.
Online grocers going back to Webvan have had trouble achieving profitability and Amazon’s pullback suggests that it too is facing hurdles. One potential response would be for the company to open AmazonFresh Pickup locations like the two it operates in Seattle’s Ballard and SoDo neighborhoods.
Whole Foods offers home delivery in 37 states and Washington, D.C. in partnership with Instacart.
Amazon’s third quarter net sales increased 34 percent year-over-year to $43.7 billion, which includes $1.3 billion from Whole Foods. The company’s net income was $256 million for the period compared to $252 million last year.
- Amazon is shutting down its Fresh grocery delivery service in parts of at least nine states – Recode
- Amazon Shuts Down Amazon Fresh Grocery Delivery In At Least 9 States – Delish
- Amazon.com Announces Third Quarter Sales up 34% to $43.7 Billion – Amazon.com, Inc.
- Amazon.com (AMZN) Q3 2017 Results (Earnings Call Transcript) – Seeking Alpha
- Have grocers figured out how to successfully do business online? – RetailWire
- Will Amazon become a dominant force in grocery after acquiring Whole Foods? – RetailWire
- How will AmazonFresh Pickup stores affect the grocery business? – RetailWire
DISCUSSION QUESTIONS: What do you make of Amazon’s decision to end AmazonFresh deliveries in some areas? Do you expect Amazon will find another approach to fresh groceries in the areas it is leaving? Will other grocers expand or pull back on home deliveries on this news?