I order my groceries from FreshDirect, the online grocery store that makes food shopping incredibly easy — here's what it's like

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FreshDirect

• Grocery shopping in New York City or any of its boroughs can be a huge pain if you don't have a car.
• To avoid carrying 40 pounds of food home from the store and irritating my back, I started using FreshDirect, an online grocery store that delivers food right to my door. 
• Below you'll find everything you need to know about how FreshDirectworks, what it costs, and how I deal with not being able to touch or see my food before buying it. 

I don't hate grocery shopping. Quite the opposite actually — I love leisurely strolling through aisles, trying to follow my meticulously curated grocery list while simultaneously allowing myself to get distracted and inspired by everything that's not on it.

Sadly, once I moved to an overpopulated city, this relaxed Sunday afternoon ideal became a perfect pipe dream.

Grocery shopping in Williamsburg, Brooklyn is terrible. I can't get through the produce section without my cart getting hit or my vegetables being blocked by boxes to be unloaded, and after having to weave my way through a hundred people shoved into narrow aisles of a small store, I have to carry home 40 pounds of food. It's not ideal — especially for someone who has back problems (and who grocery shops for a two-person household). 

A few months ago, I started using FreshDirect, an online grocery delivery service that has helped me save both money and time. 

FreshDirect

Here's how it works:

FreshDirect works exactly like any other shopping site. You search the items you want, and add them to your cart in the offered quantities. Once you've finished shopping, you'll select a delivery time with a two-hour window, and pre-pay for your items. You can schedule your deliveries for next-day, or up to a week in advance, but there are no day-of options. Your boxes will arrive in a refrigerated truck, and the delivery person will even bring them inside to your kitchen counter. 

When shopping on the site, you can look for inspiration by browsing sections like "fresh deals" and "top rated" or check out the products with available coupons. You can also search for local ingredients, shop specifically for organic items, or order basic home necessities like toilet paper and Lysol wipes.

And just like a regular grocery store, they have both name brand and generic brand food items, specialty groceries, ready-made items, and party platters (plus wine, beer, and liquor in certain areas). Their array is as vast as any big box store would be — it's just much easier and faster to navigate.  

One feature that I love the idea of but haven't yet used is the "Farm Share" box, which is basically like a one-off CSA box full of a random assortment of produce from a local farm near you. In my area, the option that comes up is a $40 box full of a dozen eggs, one block of cheese, and four to five varieties of vegetables from the current harvest. 

A small portion of FreshDirect's available categories to shop under "vegetables."FreshDirect

Sign up and delivery fee info:

The company only operates in specific areas of New York, DC, New Jersey, Delaware, and Philadelphia, and has different delivery fees for each area (see all cities and fees here). If you live in Manhattan or any of the boroughs, the delivery fee is $5.99 per order, plus an optional tip for your driver.

If you love the service and use it frequently, you might want to invest in the DeliveryPassoption, which is $79 for six months or $129 for a year, and affords you free delivery, exclusive special offers, reserved time slots, and a bonus $5 discount on orders delivered between Tuesday and Friday.

If you were to order from FreshDirect weekly, it would cost you about $311 per year in delivery fees — so the membership is extremely worth it. You'll also always find a discount for signing up as a new customer — right now you can take $25 off your first order of $99 or more with code 'WELCOME.'

Why I like it:

Ordering groceries online has its advantages. It helps me stick to a list so I don't overbuy or get distracted by all the new ingredients I see, and it lets me search deals all in one place instead of running around the store, so I can build my weekly meal plan based on what's on sale. And possibly the most important thing to note is that I don't have to get dressed to go shopping. I can do it all from the comfort of my couch on a Saturday morning with a cup of coffee in my hand and my cat on my lap. 

However, it also has its limitations. You can't touch or smell the produce for ripeness, and you can't just get "whatever looks best," as my mom would say. It can also be risky to get fragile items like eggs (something I know from experience). 

FreshDirect

How I deal with the limitations:

I buy eggs in person when I have time during the week, and I build my list around things I know are in season to avoid unripe or tasteless produce. FreshDirect's produce is, on average, excellent — and if you ask me, the annoyance of getting the occasional batch of unripe bananas in my order doesn't hold a candle to the nightmare that is going to the store and carrying groceries home on a Sunday in the city.

Plus, I know that if anything's wrong with my order, or if I'm not happy with something, I can just message FreshDirect's customer service. They're expedient and efficient, and in most cases, a complaint will result in at least a refund, if not a credit to your account for whatever inconvenience was caused. 

So whether you also hate carrying groceries home, or you just have a hectic schedule that makes grocery shopping a major chore, it's worth giving FreshDirect a shot. 

Amazon Go VPs Share Big Challenges of Cashierless Concept

By Randy Hofbauer - 03/21/2018

L-R: Dilip Kumar, VP of technology, Amazon Go and Amazon Books; Gianna Puerini, VP, Amazon Go; Jeffrey Dastin, technology correspondent, Reuters

Opening a new grocery concept is tricky enough as it is, often requiring adjustments even after the ribbon is cut. Amazon isn't immune to this, even with a store employing technology not used by the competition that seeks to disrupt an entire industry.

That’s arguably the biggest takeaway from the Seattle-based ecommerce giant's Amazon Go store, whose VPs, Gianna Puerini and Dilip Kumar, shared insights into the creation of the technology that fuels the store’s “just walk out” model – which caused the 10-month delay of the store's public opening due to its difficulty in tracking more than 20 people at a time or items moved from their specific shelf space. The VPs' presentation took place March 18 at ShopTalk in Las Vegas.

To give a quick overview of how it works: The store uses technology similar to that powering self-driving cars, employing computer vision, sensor fusion and deep learning to automatically detect when products are removed from, or placed back on, shelves. To use the “just walk out” technology, patrons download and check in via a mobile app, take what they want, and walk out the door, where they are charged for the products they take with them. There are no lines or barcodes to be scanned in the process.

Opening the presentation, Kumar shared three challenges his team faced when creating Amazon Go:

1. The team had to pull off the “just walk out” technology in a way that makes it seamless and effortless.
2. The concept required algorithms that are beyond state-of-the-art for its computer vision and machine learning to solve the problems of who took what. Also required were people shopping close to each other to test everything.
3. The store needed a robust hardware and software infrastructure to support everything.

True, some retailers overseas – such as Alibaba Group, with its Bingobox convenience stores – rely on RFID instead of computer vision for their own “grab-and-walk-out” stores. However, tagging every single item with an RFID label is burdensome and costly, Kumar stressed.

An interesting, unexpected challenge was training consumers to rethink how they shop in general. Puerini noted that when the first Amazon Go store opened to the public, staffers were positioned earlier in the path to purchase to answer questions and assist shoppers. However, the end of the path was in need of significant help: She didn’t expect so many to stop before exiting and ask if it were OK to leave, requiring the staff to post a sign assuring shoppers that they could go without physically checking out. Even she still sometimes thinks twice when exiting the store, as shopping Amazon Go requires changing a behavior consumers have had their whole lives.

It’s easy to think Amazon developed its new Amazon Go concept to cut costs or simply “do tech for tech’s sake” – and there might be a little truth to both. However, Puerini emphasized that retailers looking to employ similar technology in stores have to establish a sustainable business model that comes down to the customer. Grocers must ask themselves: “Who is my customer? What can I do to add value to their life? What am I uniquely positioned to offer them? And if I’m not offering something unique, am I willing to build, buy or go another route to offer it?”

ADDITIONAL INSIGHTS

Other questions and insights Puerini and Kumar brought up regarding Amazon Go include:

• What are customers buying at Amazon Go? The top seller is the chicken banh mi sandwich, although meal kits for dinner, fresh fruit in the morning, and items from Seattle bakeries also are popular.
• What has Amazon changed since opening the store? Learning about what customers like.
• How does Amazon determine what products or brands to introduce and/or discontinue?Customers write in via the Amazon Go app, which also is used to enter the store and pays for the total purchase upon leaving, about the brands and products they wish that the store stocked. When carrying a suggested item or brand makes sense, Amazon listens.
• What are the metrics for the store’s success? Pulling off the just-walk-out part is only part of the battle. Amazon Go is definitely about convenience, but none of that matters if pricing and assortment aren’t to shoppers’ liking. Therefore, primary focus is given to making sure Amazon understands what customers like, listening to their feedback and continually adapting to meet their needs.

Southeastern Grocers Embarks on Restructuring

03/27/2018

As expected, Southeastern Grocers LLC (SEG) has filed for Chapter 11 bankruptcy in Delaware to implement a pre-packaged plan of reorganization.

The Jacksonville, Fla.-based grocer revealed earlier this month that it has entered into a restructuring support agreement with a group of creditors and its private equity sponsor regarding the terms of a comprehensive financial restructuring. The company will continue to operate throughout the process.

SEG President and CEO Anthony Hucker noted that the retailer was “taking the next step in the implementation of our financial restructuring plan. This pre-packaged, court-supervised financial restructuring process provides for a clear and expedited path to put SEG in the best position to serve our communities and succeed in the competitive retail market in which we do business.”

Hucker said that the company had “more than 580 stores operating under the Bi-Lo, Fresco y Más, Harveys Supermarket, and Winn-Dixie banners,” minus the 94 locations slated to close under the restructuring, adding: “We are extremely pleased that this process continues to proceed quickly and as planned. With each key milestone reached, we move closer to emerging and making Southeastern Grocers into a true success story for our associates, our customers and the communities we serve.”

According to SEG, the restructuring will lower overall debt levels by more than $500 million and maintain the company’s strong liquidity position under the new post-emergence revolving credit facility. This considerable debt reduction should result in reduced interest expense, enabling the company to invest more cash flow back into the business in the form of more store renovations and new locations. With a deleveraged balance sheet and an optimal store base, SEG can then concentrate on store growth and financial health.

SEG has filed various customary motions to obtain the court approval to continue to support its business operations during the restructuring process, including the continued payment of associate wages and benefits without interruption, all of which it expects to be granted.

The company also recently expanded its Fresco y Mas banner by three stores in two new Florida markets.

Southeastern Grocers LLC, one of the largest conventional supermarket companies in the United States, operates grocery stores, liquor stores and in-store pharmacies serve communities throughout Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina and South Carolina.

New York, Philadelphia and Miami are 2018’s Best Cities for Fresh-Food Access

Boston, Miami and Baltimore Had the Biggest Improvements in Fresh-Food Access since 2014; Oklahoma City, Colorado Springs and Indianapolis are Food Deserts, with the Least Access to Healthy Food

Written by Jon Whitely on March 26, 2018

    

New York is the best city for fresh-food access, with 75 percent of its residents living within a five-minute walk of a grocery store or year-round farmers market, followed by Philadelphia (64%) and Miami (57%). To determine these new rankings, we analyzed Walk ScoreⓇ data for 48 major U.S. cities, excluding San Francisco and Los Angeles, for which there was not reliable data.

“While visiting my grandfather’s hometown in South Carolina last summer, the only grocery store there had burned down and residents had to travel 20 minutes to the next town to get fresh food,” said Redfin chief economist Nela Richardson. “Many in the community didn’t have transportation or were elderly. Neighbors organized carpools just to make sure people had access to food. This is obviously an extreme example, but it illustrates the importance of this basic amenity that many people take for granted.”

Boston, Miami and Baltimore showed the biggest improvements in access to fresh food since 2014, when Walk Score last reported a comparable ranking.

“Wegmans and Market Basket are two grocery store chains that have been expanding and opening up new shops throughout the city of Boston over the past couple years to meet the growing demand,” said Redfin Boston agent David Pollack. “Many homebuyers put a premium on homes that are in close proximity to supermarkets with fresh produce, in-store cafes and hot food services.”

U.S. Cities with the Best Access to Fresh Food

Rank	City	Residents with a Grocery Store or Farmers Market within a 5-Minute Walk (2018)	Residents with a Grocery Store or Farmers Market within a 5-Minute Walk (2014)
1	New York	75%	72%
2	Philadelphia	64%	57%
3	Miami	57%	49%
4	Boston	54%	45%
5	Oakland	53%	49%
6	Chicago	50%	44%
7	Baltimore	49%	41%
8	Washington, D.C.	43%	41%
9	Milwaukee	34%	29%
10	Minneapolis	33%	29%

Food Deserts

Our analysis also identified “food deserts,” cities where few residents have a grocery store or year-round farmers market within a five-minute walk. Oklahoma City topped this list, with just 6 percent of its residents living within a stone’s throw from fresh food, followed by Colorado Springs (6%) and Indianapolis (7%). Of the food deserts we identify below, Tucson and Wichita had the biggest increases in shares of residents with fresh food access since 2014.

“Oklahoma City has been slower than other cities to adapt to having fresh food, gyms and outdoor activities within walking distance, ” said local Redfin agent Linda Huynh. “But keep in mind, our city is the eighth largest in the U.S. by land, with just 1.5 million residents. Things are really spread out and mostly accessible by car only.”

U.S. Cities with the Worst Access to Fresh Food (Food Deserts)

Rank	City	Residents with a Grocery Store or Farmers Market within a 5-Minute Walk (2018)	Residents with a Grocery Store or Farmers Market within a 5-Minute Walk (2014)
T1	Oklahoma City	6%	5%
T1	Colorado Springs	6%	6%
3	Indianapolis	7%	5%
4	Charlotte	8%	6%
T5	Wichita	9%	5%
T5	Mesa	9%	6%
T5	Raleigh	9%	6%
T5	Jacksonville	9%	8%
T5	Nashville	9%	9%
10	Tucson	10%	6%

Methodology

To calculate the percentage of city residents with access to healthy food, we used Walk Score data to analyze 48 cities. Walk Score uses population data and city boundaries that come from the U.S. Census, and the list of grocery stores comes from a mix of Google, Localeze and places added via the Walk Score website. We calculated millions of walking routes for this ranking with our Travel Time API to determine how many grocery stores are within a five-minute walk for residents. Our rankings are proximity based and do not consider the cost of food. Los Angeles and San Francisco were excluded from this report because of unreliable data.

El Super to Acquire Fiesta Mart

Retailer expanding in race to become largest Hispanic-focused grocer in U.S.By Natalie Taylor on Mar. 26, 2018

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Bodega Latina Corp., doing business as El Super—a Hispanic grocer and subsidiary of Mexico's Grupo Comercial Chedraui S.A.B. de C.V.—is acquiring Fiesta Mart, a Houston-based international food retailer, in a push to expand its reach in the Latino grocery sector.   

Fiesta operates 63 stores primarily in the Dallas and Houston areas, with a focus on Hispanic offerings. The transaction will create one of the largest Hispanic-focused supermarket companies in the U.S., with a total of 122 stores across California, Arizona, Nevada, New Mexico and Texas—where more than 50% of the Hispanic population lives—with revenues of approximately $3 billion, according to company officials.

The transaction is expected to close at the beginning of the second quarter of 2018, subject to customary closing conditions. Fiesta stores will continue to be operated under their own banner.

"Combining the strengths of Bodega Latina with those of Fiesta will accelerate the evolution and growth of Fiesta through combining the parties’ scale, geographic reach, talented teams and market knowledge,” said Sid Keswani, CEO of Fiesta, in a statement. 

Fiesta was acquired nearly three years ago by the private-equity firm Acon Investments.

With the rising population and purchasing power of the Latino demographic in the U.S., retailers have been racing to tap into the fast-growing grocery sector through acquisitions and Hispanic-focused store expansions. Southeastern Grocers last week announced the expansion of its Fresco y Mas banner with three new stores in Florida, and in November, Albertsons Cos. acquired an equity stake Latino grocery chain El Rancho Supermercado.

The acquisition of Fiesta allows El Super to expand into Texas through a well-established supermarket operator, said Carlos Smith, president and CEO of Paramount, Calif-based Bodega Latina. “Through the combination of the strengths of our two organizations, we will be well positioned to significantly accelerate our vision of efficiently offering high-quality products at the lowest possible prices,” he said. “We believe this transaction will be beneficial for all of our stakeholders, including customers, suppliers, employees and vendors.”

RBC Capital Markets LLC served as the exclusive financial advisor  to Bodega Latina, and Sidley Austin LLP served as legal advisor. The Food Partners LLC served as exclusive financial advisor and Hogan Lovells U.S. LLP served as legal advisor to Fiesta.

With its purchase of Whole Foods, is Amazon’s goal to revolutionise food distribution?

March 21, 2018 4.39pm EDT

Author

1. Isabelle Chaboud
   Professeur associé d’analyse financière, d’audit et de risk management, Grenoble École de Management (GEM)

Disclosure statement

Isabelle Chaboud does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

Fruit and vegetables department at Whole Foods Market. Herry Lawford/Flickr, CC BY

On March 20, 2018, Amazon became the second most valuable company in the world, with a market capitalization exceeding $768 billion. The US retailing giant made key investments in 2017, including an offer to buy the Whole Foods Market organic grocery chain at $42 per share, or a total of $13.7 billion. Amazon has gained almost $19 billion in market capitalization shortly after the announcement, and the acquisition was finalized in August 2017. So what are the motivations behind this acquisition? Who will be the winners and losers?

Amazon continues its foray into the food industry

At the Amazon headquarters in South Lake Union, Seattle. Cheuk-man Kong/Flickr, CC BY-NC-SA

The second “A” in the acronym of US web giants, GAFAM (Google, Apple, Facebook, Amazon, Microsoft), Amazon realized $178 billion in sales at the end of 2017versus $136 billion at the end of December 2016. The company employs 341,400 people and has built its reputation on the distribution of music, books and cultural content. The online retailer makes every effort to optimise its selection of items, their prices and the speed of delivery, including its well-known “Prime” service, and is exploring the possibility of delivery by drone.

The company made his first steps into the food industry in 2008 with the launch of AmazonFresh in the United States. For a monthly fee, customers can order fruit or vegetables online for home delivery. The service was subsequently expanded to London and Boston in 2016, and Tokyo, Berlin, Potsdam and Denver in 2017. Amazon clearly wants to expand its presence in food distribution, a market valued at $800 billionaccording to Fortune.

As the online demand for food has yet to be a big success, Amazon has turned toward a multi-channel offering, expanding from e-commerce to investing in brick-and-mortar stores. A particularly innovative example is AmazonGo. Using artificial intelligence and RFID – what Amazon has dubbed the “just walk out technology” – customers with the AmazonGo application simply enter one of the stores store and select the items they wish to buy. Every time a product is taken, it’s automatically added to the customer’s personal Amazon account – no more need to wait in line or go through a physical checkout.

The first AmazonGo store opened in Seattle in January 2018, and if the initiative proves successful, Amazon plans to open 2,000 in the United States and then Australia. A revolutionary new way of shopping? Certainly, but it also raises questions. What would happen to cashiers’ jobs were this system were widespread? Technical snags have also slowed Amazon down, as revealed in a Fortune article, “Amazon’s Cashier-Free Store Might Be Easy to Break” – the technology is not currently sophisticated enough to manage more than 20 customers at a time. So this may be one of the reasons why Amazon is stepping up its multichannel offering by turning to Whole Foods.

Whole Foods Market in West Hartford, Connecticut. Mike Mozart/Flickr, CC BY

What is Whole Foods Market?

A leader in the distribution of natural and organic food products in the United States, Whole Foods Market is the first US-certified organic distributor. The group generated revenues of $15.7 billion at the end of September 2016, $1 billion in operating cash and had a return on invested capital of 12.7%.

Founded in 1978, the first Whole Foods Market store opened in 1980 in Austin, Texas. At the end of September 2016 the chain had 456 stores – 436 in the United States, 11 in Canada and 9 in the United Kingdom – and employs 87,000 people. Whole Foods pays particular attention to the source and quality of its products (natural and organic), its staff and is involved in the local community.

In fiscal year 2016, Whole Foods Market launched a store format called 365. With the goal of offering the best value for money through carefully selected products. The 365 stores have a simplified operational model, with central purchases and automatic inventory replenishments.

Cereal aisle at a Whole Foods Market. GoToVan/Flickr, CC BY

Why did Amazon buy Whole Foods market?

The acquisition of Whole Foods by Amazon makes it possible to combine two leading brands, both focused on a customer-centred approach. Partnering with Whole Foods will allow Amazon to expand its multichannel offering and further enhance the customer experience. The potential for development is enormous because Whole Foods Market is mainly present in the United States today, but the concept could be extended to other countries. Lastly, Amazon is now confronted with the challenge of seasonality: 33% of annual sales are made in the fourth quarter of the calendar year. Diversification into food would help to smooth out its cash flows.

Fall specials at a store in Washington, D.C.Elvert Barnes/Flickr, CC BY-SA

Nonetheless, the acquisition raises some important questions. The first is employment, because Whole Foods places considerable importance on its employees. It has been considered one of the top 100 US companies to work for 20 years, according to Fortune magazine. As at September 25, 2016, Whole Foods Market has approximately $3.5 billion in fixed assets (stores, leasehold improvements, etc.) on the balance sheet and $1 billion in long-term leases for some other stores. In the foreseeable future, will Amazon keep all the Whole Foods brick-and-mortar stores, and all the employees who work there?

The second question concerns the pricing policy and the possible divergences between Amazon and Whole Foods. The organic chain adopts rather high prices – generally 10% to 30% more than its direct competitors – and has sometimes been criticized on this aspect. It is one of the reasons why the group has launched the 365 stores. Amazon, on the other hand, is anxious to offer competitive prices. Will Amazon offer products with higher prices or will Whole Foods reduce its prices?

The third question concerns the digital investments Whole Foods Market has already made and is continuing, for example, with the introduction of EMV (Europay, MasterCard and Visa) technology at the point of sale and the distribution of digital discount coupons.

Finally, what will happen to the partnership that Whole Foods Market has formed with Instacart, the start-up created in 2012 (by a former employee of Amazon), which manages the deliveries of Whole Foods Market and in which Whole Foods has also taken a financial stake?

Who are the winners and the losers?

Amazon headquarters in Seattle, Washington.Kiewic/Flickr, CC BY

The big winner is of course Amazon. The Seattle group should not have difficulty absorbing Whole Foods, whose purchase price seems fairly reasonable in terms of its turnover: almost $16 billion at the end of September 2016. The group expects its sales to grow by 2.5% to 4.5% in 2017, with operating profit representing 8% of sales while maintaining a return on investmenttarget of at least 11%.

Conversely, the main players in distribution seem less solid. Even Walmart, the world’s largest distributor with nearly $486 billion in sales, saw its market capitalization fall by $12.8 billion, a 5.4% drop between the June 15, 2017 ($237.8 billion) and June 23, 2017 ($225 billion).

According to Fortune, within 24 hours of the initial announcement, shares in Walmart dropped 4.7%, Target 5.1% and Kroger 9.2%, while Amazon increased by 2.4%. It remains to be seen whether this drop is only momentary. As indicated by CNBC in the article “No worries for Wal-Mart, Amazon buying Whole Foods is only a drop in the bucket”, this seems probable given the high share of the market held by Wal-Mart:

“Wal-Mart controls the largest share of the US food market with about 14.5% of total sales and Whole Foods Market and Amazon will stay smaller with Whole Foods controlling 1.2 % of market share and Amazon 0.2% of market share in food.”

A changing market

In any case, this reinforcement of Amazon in food will only accentuate trends already noticed at the level of consumers who leave the hypermarkets for local businesses and increase their online purchases.

In the United Kingdom, Tesco, the UK’s largest distributor and private employer, is still struggling to regain its customers. The latter now focus on convenience stores with smaller daily baskets and supplement them with online purchases. This trend is not new, as at the end of February 2015, combined with a hard-fought price struggle by the “hard discounters” Aldi, Asda and Lidl, Tesco had published a historic loss of 5.7 billion pounds (almost 7 billion euros). J. Sainsbury and Marks & Spencer also suffer from the same pressures and their financial results have been disappointing. Tesco posted a loss of 40 million pounds at the end of February 2017, but its turnover has fallen by 9.75% since February 2015.

In France, customers are also abandoning “hypermarkets”. French retailers like Auchan, Leclerc, Carrefour and Monoprix are adapting their product offerings and changing the formats of their stores to deal with profound changes in consumption patterns. Changes very well described in the video above with the phenomenon of slow life : consume less, but better.

Beyond the efforts already made by these French retailers, they will have to further strengthen their online presence and invest heavily in high-performance information systems and data analytics. A trend probably anticipated by Carrefour with the appointment of Alexandre Bompard, who had successfully led the digital shift of Fnac.com to become the third largest French e-commerce retailer behind Amazon and Cdiscount.

On January 23, 2018 Carrefour unveiled its transformation plan for 2022. In addition to a voluntary departure plan of 2,400 people for France, it announced massive investments in digital of 2.8 billion euros by 2022, a target of 5 billion euros in sales in food e-commerce by 2022 as well as a target of 5 billion euros in organic sales in 2022 (from 1.3 billion euros currently).

Amazon’s strategy in food

Amazon has already revolutionized the distribution of music and books – will it also revolutionize food distribution? The group has efficient logistics platforms and has invested heavily in its information systems and merchant sites since 2012. It is also continuing the development of the “just walk out technology” of AmazonGo stores.

The acquisition of Whole Foods is thus not good news for large distributors. The US giants have all seen their market capitalization falling in recent days. European distributors are also concerned by these new modes of online consumption and the need for a multi-channel offering. In France, major distributors are lagging behind in e-commerce and the arrival of Amazon as a new competitor as well as that of Costco on the French market since June 22, 2017 only make the challenges even more important. The food distribution industry is a low-margin industry and therefore the search for efficiency and economies of scale are key elements.

Vegetable section in a Whole Foods Market in London. Yvon/Flickr, CC BY

Even though today many consumers are still in the store to choose their fruits and vegetables (and especially in France), these habits may well change in the next 25 years. Amazon, which has often been a trendsetter, will only facilitate the use of e-commerce and may well have a significant impact on food distribution if it does not change.

Amazon is becoming so big and financially powerful that it can afford price cuts, a model that may not be sustainable for other food retailers. After including Whole Foods Market aggregate net sales of $5.8 billion since the acquisition in August 2017, Amazon reported record results for 2017 with net sales amounting to $177.9 billion (up 30,8%) and a net profit reaching $3 billion. The American giant is even targeting the French market. Reuters announced on February 28 that French retailer Systeme U is discussing a possible grocery-supply deal with Amazon.

With almost $31 billion in cash and cash equivalents and marketable securities, Amazon has the ability to perform more acquisitions in the future and benefits from a strong bargaining power. It seems that Amazon is indeed aiming at becoming a key player in the food distribution at a worldwide level.