Amazon Fresh rolled into Seattle in 2007, offering fresh grocery delivered straight to your door.
If you were one of the lucky ones, that is. Amazon launched the service by invitation only, with a fleet of trucks delivering to a single zip code, Mercer Island.
Since then, it has maintained that sedate pace and slowly expanded. Today, Amazon delivers to 80 zip codes in Seattle. Its bright green delivery trucks are now a familiar sight in the city - but recent rumours suggest Amazon might be gearing up for a Fresh trial in California, fuelled by the fact that it is working on two new enormous fulfilment centres in Los Angeles and San Francisco.
The official line from Amazon remains a cautious one. In 2011, Amazon CEO Jeff Bezos told shareholders Amazon was still “tinkering” with Amazon Fresh, describing it as an “expensive” service to provide.
“We like the idea of it but we have a high bar on what we expect in terms of the business economics,” he said.
US analyst Jim Prevor suggests Amazon’s reticence may be a result of it struggling to churn the volume of stock required to justify its delivery costs.
“If you are sending a van 20 miles to deliver grocery to one house, on one street, you’re going to lose a lot of money,” he says. “But if you can deliver to 200 houses on that same street you’re going to make a lot of money because your distribution costs go down. That’s the focus, because if they can get 10,000 orders a day in the routes they are already running, that is better than a brand new market.
“It’s painstaking, going in city by city, setting up distribution and delivery. Even if Fresh was wildly successful in Seattle, and it hasn’t been, you still face having to start all over again.”
Is Amazon after a bigger slice of the grocery market?
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