Amazon Sets Its Sights on the Grocery Biz

Is Amazon destined to become the Walmart of the 21st century? Taking a page from the playbook of the brick-and-mortar behemoth, the online mega-emporium is getting ready to expand big-time into the grocery biz.

We all know how the supersized supercenters with their wide-load grocery aisles worked out for Walmart: since the first supercenter opened in 1988, the chain has become the number one grocer in the country—in effect, sticking it to the grocery biz pretty much the same way it did to discount stores decades before.

But selling lettuce and ground beef online? That involves a whole different devilish set of logistics.

There may have been a Walmart supercenter being built, like, every 10 seconds throughout the 1990s, but as NPR reports, Amazon has been testing its AmazonFresh grocery delivery service in Seattle for five years, trying to work out all the kinks. Now the company is poised to expand the service to Los Angeles (as early as next week), and then San Francisco before the end of the year. If all goes well, AmazonFresh could arrive in 40 cities by the end of 2014.

Of course, groceries sell at famously thin profit margins—so why do big retailers even want the bother? As NPR puts it, “home grocery delivery could prove to be a Trojan horse for Amazon to get inside your home more frequently.”

The logic is simple: you’ve got to eat every day, so if Amazon is already coming by to deliver your salsa and cilantro, you might just go ahead and throw some non-food stuff in that order as well.

That’s essentially why Walmart (and Target) are now devoting more space than ever to selling groceries, and why struggling shopping malls have even been experimenting with grocery stores as anchors: not to get in your house, of course, but to get you on the premise, wallet in hand, ready to shop, on a more regular basis.

So that’s what’s in it for Amazon (the company fervently hopes, no doubt). But what’s in it for you?

I do not live in Seattle, so I cannot attest to some of AmazonFresh’s fancier features—like pre-dawn delivery, setting your own delivery window, or your groceries being delivered in fancy chilled tote bags. Nor can I attest to whether the Dean & Deluca-like price point is worth it. (Seriously, one butternut squash for $7.99!?)

AmazonFresh is billed, in the words of a market analyst to NPR, as the “ultimate convenience.” Really? True, the AmazonFresh site is far cleaner and easier to navigate than Amazon’s eye-crossingly unwieldy home site. You search for “ground beef” here, and you get a relatively manageable 52 results. Search for, say, “light bulbs” on the main Amazon site, and you get over a million damn bulbs.

But you’ve got to ask yourself: is it really easier to type every ... single ... grocery ... item ... you need into a search box, then sift through the results, rather than just swinging by the grocery store on the way home? Or is this really about something else? Like, say, status.

Which is where any parallel with Walmart falls apart. Both companies may be voracious in their appetite for market share, but clearly AmazonFresh is targeted to a specific demographic. You know the type—educated, busy, rich. The kind of people who would rather eat paste than shop at Walmart.

AmazonFresh offers things like Organic Prairie beef and Ancient Harvest quinoa, and you can filter your results to show only items that are “High Fructose Corn Syrup Free.” You can even pick up copies of every book Michael Pollan has ever written — most of which essentially argue that we should be more, not less, connected to our food. And then you can pop over to the meat department and scroll your mouse over a digital photo for a magnified view of boneless chicken breasts.

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