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Will Fear of Amazon Cause Many Others to Pursue Online Grocery?

June 7, 2013Written by George Anderson

It is one of those clear childhood memories — asking my mother for permission to do something of which she disapproved and being asked, "If everyone jumped off a bridge, would you jump too?"

Engaging in me-too behavior is often unwise in personal life. It certainly is also true of professional ventures and, yet, mimicry is often the name of the game in retailing. All of this brings us to the question of whether other retailers will start testing online grocery sales now that AmazonFresh appears to be expanding beyond Seattle to Los Angeles and then San Francisco.

The nation's largest grocer, Walmart, doesn't appear ready to take the leap, even though it has had some success in England with Asda and in Mexico with Superama. The chain has also tested a home delivery service in the San Francisco Bay area.

"We are not making any announcements about other markets for grocery delivery in the U.S. right now," Neil Ashe, the president and chief executive officer of Walmart Global eCommerce, told Reuters.

The nation's second largest grocer, Costco, is also unlikely to pursue home deliveries. Company CEO Craig Jelinek told Bloomberg Businessweek that Costco had studied online grocery services, but hadn't figured out how it could be done profitably.

While Amazon has not reported on the profitability of its venture in Seattle, Richard George, professor of food marketing, Haub School of Business at St. Joseph's, wrote in a RetailWire discussion earlier this week that the company had captured a five percent share of market and is making money.

One company already in home delivery of groceries, FreshDirect, should be an acquisition target for Amazon, according to Larry Dignan, editor in chief at ZDNet.

"The acquisition would be akin to Amazon's purchase of Zappos. Amazon would get distribution, brainpower and leave the brand largely alone," wrote Mr. Dignan.

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