Monday, July 24, 2006

Amazon's Foray into Online Groceries

"Amazon is currently selling just non-perishable goods, so is not necessarily competing directly with FreshDirect and their ilk who also offer fresh produce, but Amazon's economies of scale and logistics expertise will ensure they will have a significant impact on the market.

Online grocery shopping has never been a very popular categories of online retail, compared with books or music, for example. Research from WSL Strategic Retail shows that just 12% of US Internet users purchased groceries online in 2005, up from 8% in 2003."

Great insightful article, however I believe in the UK Tesco are leading the way in fresh goods and non perishables. "Sales for Tesco.com almost reached £1bn in 2005, with profits for the online store up by 55% to £56.2m.

Sales rose at Tesco.com by 32% for the year, now representing over 3% of its UK sales of £32.7bn. Tesco said it had 750,000 regular customers and 200,000 orders a week online.
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Now tesco is selling i-tunes as well. Where Tesco's lack is a robust, search friendly and navigable site. It's an example of a brand offering cheap merchandice. Saying that, I've abandoned my cart quite a few times mainly out of frustration of not finding vegetarian produce I knew they stocked. Still, I don't think Tesco and Amazon will team up as Tesco has so much to learn from Amazon I think the affiliate model (on books, electronics and esp Amazon's affiliate sellers) would be to hard for Amazon to swallow!


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