The economics of delivery are all about scale, and no one is able to offer it as cheaply as Amazon, according to Di Di Chan, president of FutureProof Retail. But Amazon has sunk a lot of money into testing its different delivery options, such as Prime Fresh and now a drive-up grocery concept in Seattle.
“The real competition will begin when Amazon nails in-person grocery experiences, ones that can’t be had through an online experience,” says Hogben.
There is no doubt, according to Stern, that Amazon is the major disruptor in the space. They are coming at grocery from three angles: subscription and pantry service through their traditional service, Prime Now, as well as Prime Fresh. Combined, these programs have a huge impact on the grocery industry and how brands think about reaching customers.
In addition, Amazon’s big gun is its relationship it has with more than 40 million U.S. households. “They are the game changer in the business,” Stern adds.
“Amazon, if it works its magic correctly, can have an even more personalized and intuitive shopping experience by recommending meals of the day based on a broader set of customer information. To be truly successful as a full-service grocer, Amazon will need to partner with local grocers or suppliers for quality perishables,” says Kramer.