Many predicted that Amazon would take over the grocery business when it purchased Whole Foods and launched Amazon Fresh. That has not been the case. A recent study found that Amazon is a small player in the grocery business, controlling only 2.4%. That compares to Walmart at 18% and Kroger at 8.8%.
“Amazon’s all about the cloud, e-commerce and entertainment,” said Jake Dollarhide, CEO of Longbow Asset Management, according to a report in CNBC. “It’s almost like the grocery business is an expensive hobby.”
The market is extremely competitive and others in the grocery business are investing large sums of money to improve digital and delivery operations. The report said there is a huge discussion within Amazon about whether to invest more resources into the grocery business, given that the company has such huge advantages in other areas.
Amazon has tried various ventures to tap into the grocery market but not has made significant headways. That is partially because the margins in the grocery business are so low.
“The problem with a novelty is if it’s not fundamentally more valuable, then that’s all it is — a novelty,” said Scott Jacobson, a managing director at Madrona Venture Group in Seattle and a former Amazon employee
The article traces Amazon’s history and various efforts in the grocery business. Read the full article here.
