Is Amazon Fresh Misunderstood?
Amazon Fresh rollout continues extremely slowly.
If Amazon is to compete seriously in the grocery market, it likely needs at least 2,000 stores (Kroger has 2,800, Albertsons 2,252, Aldi 2000). The reason? Density and volume needed to get the margins required to make it worthwhile.
Yet, for all its voracious appetite for expansion, only 11 have been opened and 28 planned to follow.
The big industry question is why?
First, capital requirements. Opening new stores is risky and harder to close once opened, especially compared to shutting off a feature on their website.
Second, the formula. If I were Amazon, I would want to ensure that the satisfaction is super-high prior to scaling the model.
Third, patience. My sense is Amazon is fine being misunderstood until their playbook is set. Remember, if they started from here on out doubling the number of stores every year, it would only take another 5 years to reach 2,000 stores.
In the grand scheme of these, that's not that long. And it's something that should give grocery retailers pause before declaring that Amazon is too far behind to catch up.
Willing to be misunderstood? Time will tell if that's the case here.
