Ordering groceries online and having them delivered to your door is one of those concepts that always sounds so promising. But companies have struggled for years to make the business model work.
And it looks like Amazon.com is no different, despite all its experience in e-commerce and distribution.
It has been nearly four years since the online retailer started rolling out the Amazon Fresh grocery delivery service in Seattle, but the company doesn’t appear to be in a rush to expand to other parts of the country. CEO Jeff Bezos said during the company’s shareholder meeting yesterday that Amazon is “still tinkering” with the economics of the Amazon Fresh business to try to come up with a workable formula.
It’s an issue close to the hearts of many people in the Seattle region, largely because of the former presence of HomeGrocer, one of the icons of the dot-com boom around here. HomeGrocer was acquired in 2000 by Webvan, which later went bankrupt. Amazon now owns Webvan, which ships groceries via the webvan.com portal.
Here’s what Bezos said about Amazon Fresh …
“Amazon Fresh is a test. It’s only in Seattle. The customer experience is good. The economics, we’re still tinkering. The reason it’s a test is because we’re still tinkering with the business to try to make the economics acceptable. It’s an expensive service to provide. We’re basically working on it here in Seattle, seeing if we can get it to work. It’s a similar kind of operation to what HomeGrocer did 10 years ago, what Webvan did 10 years ago. We like the idea of it, but we have a high bar on what we expect in terms of the business economics for something like Amazon Fresh in terms of profitability and return on investment capital. We continue to think about that.”