Dive Brief:
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Amazon on Tuesday announced the launch of its AmazonFresh Pickup service, which enables consumers to order thousands of grocery items (including meats, fresh produce, bread, dairy and household essentials) through the e-commerce kingpin's website or mobile app for local pickup within 15 minutes.
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Amazon is trialing AmazonFresh Pickup in physical stores located in Seattle's SODO and Ballard neighborhoods, according to an email from the company sent to Retail Dive. Beta testing is for now limited to Amazon employees; there’s no order minimum, and once the service launches more widely, it will be free for Prime shipping subscribers.
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Speculation about AmazonFresh Pickup's imminent launch has been rampant for weeks as workers put the finishing touches on drive-through structures. Amazon reportedly has plans to open 20 grocery stores in major U.S. cities over the next couple of years.
Dive Insight:
Amazon helped stoke thirst for swift delivery that many consumers never knew they had, and now curbside pickup appears to be heading to a similar level of competition among grocery retailers. Wal-Mart has been expanding its own grocery pickup services and experimenting with various formats, and many traditional retailers (which have offered delivery and pickup services for years) are also expanding and marketing such services.
Still, in some ways this is a curious move, considering that grocery customers aren’t exactly clamoring for pickup services, according to Matt Sargent, senior vice president of retail for Frank N. Magid Associates, whose research found that only about 28% of grocery customers say that the ability to order online and pick up in store is important — the lowest category of all the categories Magid measured. (By comparison, some 46% of customers favor order online and store pickup services for other retail categories, Sargent said.)
That could be largely due to the fact that many consumers still want to choose their own food, particularly fresh meats and produce. And that may be why the video that Amazon released Tuesday emphasizes snacks — a category in which it has introduced its own private brands. Amazon doesn’t even really run a grocery store yet, for that matter — its Amazon Go checkout-free prototype is positioned more like a convenient store — though it has been running AmazonFresh delivery services in key urban areas of the U.S. for years now.
Even Amazon is clearly waiting to see how the pickup service goes, but Sargent said to keep in mind that, unlike many other grocers, the retailer has the time and resources to experiment, and that its aim is really to become indispensable to its Prime members.
“Amazon has the luxury to invest in these things. It seems to exist almost in a different law of physics,” Sargent told Retail Dive. “I don’t think Amazon really wants to profit from it, and that’s a scary proposition. Sure, if they can, that’s great, but the bigger goal I think is to fill out that ecosystem. This presents an excellent testing opportunity for rival grocers, and that’s where they should be lined up and quickly respond. The sit-and-wait approach is an absolute death sentence. If you wait for Amazon to establish a foothold, it’s too late."
