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What do you think of Amazon’s move to online grocery delivery?Does it give the company a competitive advantage?
Identify one of your favorite grocery stores. What attracts youto it? Can you think of anything the store has done to draw yourpatronage and stop you from buying online? Is there anythingfurther they could do to retain your loyalty?
Amazon delivers product well and no one can compete with them.They stay efficient and deal with large transactions, where theirbottom line percentage is not very high but because of the highnumber of transactions they deal with they make considerable moneyto the bottom line.
Last year they had one quarter with $30 billion in sales showinga profit of $857 million (Alba,2016). The tough part aboutdelivering groceries is keeping the produce fresh.
There have been a few companies that have tried deliveringgroceries and failed. Walmart delivers to the San Francisco Bayarea as a test but has not tried to branch out (Well,2013). Thereare smaller chains that deliver locally and seem to work in a smallgeographic area. I live in New England and we have a local grocerychain, Stop and Shop and their food delivery brand is Pea Pod. Theyhave been delivering food for about 10 years and it seems towork.
I think if Amazon takes the food delivery business nationally theyneed to do it, one area at a time, and if anyone can pull it off,Amazon can. They would be happy if they broke even delivering food.To Amazon it would be free marketing for their online giganticwarehouse of goods that they will be marketing. I do not thinkAmazon will loose on this.
My favorite grocery store is called Market Basket. I am attractedto it because of price. It has the best grocery prices in andaround Boston. I would not buy online, because I would not want topay more for my groceries than I need to. I do not think I am likethe norm. I believe there are many busy people that would spend theextra money to have their groceries delivered. There are manypeople who spend the extra money to go to Whole Foods. I am not oneof them.
Market Basket use to have a loyalty program. You would scan yourcard and save some extra money on particular brands they wanted youto buy. When they did away with that program that kept my loyalty.They spread the savings through the rest of their product. Theirbrand is to be a low-cost provider of groceries and they do a greatjob at it. One thing they could change is to add moreregisters.
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