AmazonFresh, the grocery delivery service offered by Amazon.com, Inc. (NASDAQ:AMZN), may be soon available in LA within weeks and San Francisco by the end of the year. Reuters reports 20 more cities are rumored for 2014 and there is further speculation for 40 cities in total and international Fresh delivery. The service is currently only available in Seattle.
What is the Amazon.com, Inc. (NASDAQ:AMZN) Fresh demographic? One commentator said the obvious is the busy working mother in an urban setting. One post on website about all things Kindle says it’s obviously the baby boomers. I think it’s also the Me-llennials (Millennials) who are already e-commerce savvy and also don’t drive or own cars like their parents’ generation.
Noodling around the AmazonFresh site its appeal to the Whole Foods Market, Inc. (NASDAQ:WFM) customer is obvious. The Fresh service can be pricey for the elderly on a fixed income or the lower income. However, rich agoraphobics rejoice! If you can afford Whole Foods you can afford AmazonFresh — as one yelp! reviewer noted the price point is close to Whole Foods Market, Inc. (NASDAQ:WFM).
Of over 120 yelp! reviews, the response was overwhelmingly positive, especially from those who had used Safeway Inc. (NYSE:SWY) home delivery before. One even wrote an ode to AmazonFresh based on the poem How Do I Love Thee. What complaints there are mostly relate to higher prices than Safeway Inc. (NYSE:SWY) and that the minimum order to get the free delivery keeps getting jacked up.
Purely unscientific but my best guess from the yelp! reviews is most of the reviewers were young urban professionals based on comments, i.e. the number of “Awesome!!”s, and photos. Many noted they lived in apartments and had no car.
Currently in Seattle, there is a minimum $50 order with $7.99 delivery fee and if ordered before 11 p.m. the night before, the groceries will be at your door pre-dawn. Order over $100 and the fee is waived.
Is Fresh a needle-mover?
Not yet…but as the service gradually (if not glacially, as the service has been available in Seattle since 2007) rolls out across the nation it is hoped this will become another entree to the Amazon.com, Inc. (NASDAQ:AMZN) ecosystem. As users become more comfortable with ordering groceries, they will certainly start to order more from the many Amazon.com, Inc. (NASDAQ:AMZN) specialty sites. Several yelp! users do cross-order groceries from Fresh and Amazon.com.
Fresh will change grocery shopping just as Amazon.com, Inc. (NASDAQ:AMZN) has changed publishing and e-commerce. While Wal-Mart Stores, Inc. (NYSE:WMT) and Target Corporation (NYSE:TGT) can’t compete on the convenience, they have the buying power to compete on price.
It will really be Safeway and Whole Foods that will be challenged down the line. Safeway’s advantage as noted on the reviews is cheaper prices overall and that AmazonFresh is sometimes out of stock on basic items.
Whole Foods will really have to look over their shoulder as AmazonFresh offers most of the quality goods they do at comparable prices. AmazonFresh also partners with local artisans bakers, cheesemakers, and the like to bring local specialties to Seattleites’ doors.
Right now, Amazon Fresh seems to target the Me-llennials but as they offer the service to other states and further away from urban distribution more Boomers and elderly will gravitate to its convenience. All bets are off once they hit Sun Belt states; Safeway, The Kroger Co. (NYSE:KR), and particularly Whole Foods will see stiff competition.
