Amazon Enters the Grocery Business
April 18, 2006 — -- Say you're browsing through Amazon looking for the perfect book to wile away the hours, and suddenly you're seized by a serious case of the munchies. Time to head out to the grocery store? Not necessarily.
Just click on Amazon's new offering: Gourmet Food.
Today, to accompany your appetite for Proust, Amazon presents Bear Naked Peak Protein All-Natural Granola. A case of six 12-ounce bags is marked down from $29.94 to $20.63, to boot. Granola not your favorite? One little click and a 16-ounce pouch of the Original Golden Valley Natural Beef Jerky can be winging your way -- only 13 bucks.
Amazon, which made its name selling books and records, is offering 84 pages of food -- 2,000 basic, packaged products. The choices range from coconut water to energy bars, from popcorn to peanut butter, and all the way down to sardines.
It's offering a wealth of health. The virtual "shelves" are stocked with recommended remedies for allergies, coughs and colds. You can get contraceptives, too, all courtesy of Amazon.
So what's going on?
"We look on this as a drugstore, and you are going to find food items in a drugstore," Amazon spokeswoman Tracy Ogden told the Financial Times this week.
Diversity Could Pose Problems for Competitors
By adding food to its menu, Amazon is jumping into an online market already populated by competitors Costco and Wal-Mart. It is expected, however, to increase the competitive pressure because it offers so many other things. Indeed, it is further evidence that Amazon intends to be the dominant one-stop online shopping destination for practically anything short of perishables.
Because Amazon is buying literally tons of stuff from wholesalers, it can negotiate lower bulk purchase prices and pass the savings on to customers by keeping retail prices low -- undermining its competitors in the process.The company's sheer size could pose problems, too. Some of the other online grocers, such as Peapod, offer fast delivery and garden-fresh produce -- often in just one day. Amazon isn't competing on that level just yet. A can of Campbell's tomato soup purchased online from Amazon can take up to five weeks to reach you, for example.
Lots of Amazon's fare is in the snack variety, anyway. It's decidedly upscale as well, which the company believes reflects the "tastes" of its clientele. If you can't face another day worrying where you will be able to obtain Wolfgang Puck Beef Burgundy With Egg Noodles Soup, at $31.20 for a dozen 14.5-ounce cans, Amazon can provide relief.
Amazon currently offers you personal recommendations based on previous purchases. Wonder what CD would go with Kellogg's Corn Flakes? This is the place to find out.
In its efforts to cross all the T's and dot the I's of its customer base, Amazon is also offering a range of treatments for those who overdo the snack thing and could one day face dilemmas no book is supposed to produce: diarrhea, gas or nausea.
It's one-stop shopping, Internet-style.