It seems as though every couple of years we report on rumors that Amazon.com is getting ready to take its grocery delivery service beyond the company's Seattle test market to other cities across the U.S. So far that hasn't happened, but according to a Seattle Times report, that may be about to change as Amazon's rapid rollout of distribution centers has put it in a position to deliver groceries to customers in densely populated markets such as New York and San Francisco.
While Amazon's goals have always been big for any business in which it operates, there remain questions as to whether the company has found a way to make bottom line sense of a grocery delivery service.
"It's not like they're pricing things to win market share, which usually is Amazon's M.O.," Sucharita Mulpuru, a Forrester Research analyst, told the Seattle Times. "The fact that they've been so slow to push it out of Seattle is a testament to how challenging the business model is."
Few companies have been successful with online grocery. Many supermarkets now provide store pickup services as a compromise solution that offers customers the convenience of online shopping while reducing the costs associated with home delivery.
Among those that have managed to make a go of home delivery is Peapod, which currently has around half-a-million customers and a goal of reaching $1 billion in sales as early as 2015.
Fresh Direct competes with Peapod in the New York metro area, including parts of Connecticut and New Jersey. The service emphasizes perishables and restaurant quality prepared foods as a means to grow its share of the market among affluent households.