Over the past twenty years Amazon has grown from a company selling books out of a garage to an online retailer that dabbles in everything from streaming video to Android-based tablets/phones to web services that have become a $6 billion business for the company. Amazon has also ventured out into grocery business in recent years with AmazonFresh, which delivers — you guessed it — fresh groceries in select, urban areas around the United States (same-day and next-day delivery services are offered via AmazonFresh).
However, Amazon is embarking on a new endeavor that provides yet another delivery option for busy consumers that can’t be bothered with pushing a shopping cart around grocery store aisles or waiting in long checkout lines (you know, the stores that have 15 checkout lines but only 3 open at any given time). According to a new report, Amazon is looking to construct a 11,600 square-foot building in Silicon Valley (the first of many) that will serve as a pickup point for AmazonFresh groceries ordered online.
Image Source: Flickr (Atomic Taco)
Having a place for customers to pickup their groceries instead of having them delivered could solve a number of existing issues for both Amazon and AmazonFresh customers. For starters, delivering fresh, perishable goods to customers is expensive. Not only does Amazon need refrigerated trucks (which can be costly), but the company is already dealing with high delivery costs that rise on an annual basis. Having a convenient pickup location for groceries helps eliminate that cost.
On the other hand, having a pickup location allows AmazonFresh customers to grab previously ordered groceries at their leisure, rather than having to sit around at home waiting on a delivery person to show up with a gallon of milk and carton of eggs that would go bad sitting on your doorstep in 100-degree summer heat.
“Amazon’s entire value proposition is based on this idea of immediacy, and getting items to the shopper as quickly as possible,” said Kantar Retail analyst Nicole Santosuosso in an interview with the Silicon Valley Business Journal. “I could see something like this being tied into that overall value proposition.”
According to documentation obtained by the Silicon Valley Business Journal, customers would be able to choose delivery windows ranging from 15-minutes to two-hours, and there would be as many as eight drive-thru stalls where customers could pull-up to retrieve their online orders. If you don’t have a car (which is the case for many that live in densely populated city centers), customers can also “arrive on foot or bicycle and pick up their groceries and other retail items in the store.”
The “order groceries online and pickup at the store” concept is nothing new, and many national grocery chains already provide similar services. But as we seen with every other market that Amazon has entered, it’s a quick study and often leverages its vast knowledge of inventory systems and lean distribution channels to club entrenched players over the head until it gains an upper hand (well, that’s if we don’t count the Fire Phone flop). Making significant headway in the cutthroat, often low-margin grocery sector is a huge undertaking, but we have the feeling that if anyone can do it, it’s definitely Jeff Bezos.