Amazon Fresher Than Ever
Can you believe I caught the flu? Weirdly enough, when I don’t exercise my brain for longer than a week, I have this very odd fear that my cognitive abilities will all dwindle away within that time.
Fortunately for me, every week I return and I feel more capable of anything. Today I felt capable of going outside.
Some moments in life are difficult, but those are when it’s time for you to go a little slower and appreciate your own hard work. Look at your goal and be grateful that you’ve given yourself the strength to find a purpose for your work. Be grateful that you have the tools, or the opportunities to get closer to your goal. You might not have all of the answers, but your community will. Surround yourself with people who work to sustain their own level of interests and integrity. Pursue these relationships out of pure curiosity, not entirely out of greed.
Connect with your neighbors, ask what the guy at the grocery store is wearing today. Call your family (if you like them) and ask them what they do for a living and what about it interests them, even if they’re only there for a paycheck.
Sure, digital media has made it easier to communicate with strangers faster. Unfortunately, it’s only there to serve a quarter of the work.
While on this inspirational note, let’s talk about Amazon Fresh, baby. Not a fan of Amazon nor their ethics, but this doesn’t take away from the fact that they are a large publicly traded company.
Their expansion into Amazon Fresh happened in 2020. But then as a consumer I questioned.. they already have Whole Foods in their assortment, why new stores now?
Surprisingly enough, they do share some products with Whole Foods. Mostly the 365 brand and a sprinkle of the produce options are packaged with Whole Foods labels.
What I really wanted to get down to was the WHY. Why grocery? I understood the branching out into pharmaceuticals and transportation and hardware and so forth, but what am I missing about the profits from grocery stores? The Amazon Fresh stores are always empty when I visit. I don’t visit frequently. Mostly just for meat. The meat is handled up to code and stored well, so I pick up poultry when I’m in the area.
During these brief strolls down the aisles, I realize something.. these stores are very intentional. The pricing of items as simple as dry seasonings are comparative (not competitive) to every single grocer within 15 miles of its location. Each department is merchandised effectively, the price tags are all digital to reduce printing costs and employee labor. Check out lines are accompanied by present staff, reducing shrinkage that happens left and right with traditional grocers who’ve transitioned completely to self-checkout. They would not be continuing to open these locations (very strategically placed btw) if there wasn’t money to be made here. Or would they? Idk.
So what is it? Is it that they want to be the center of mind and this is a play at engagement? Or are they establishing a footprint in an untapped market to service customers who are already loyal to their name?
I want to say that unless you are a specialty grocer, everyone knows that the margins in grocery stores are slim. According to The FMI, after taxes, grocers had a net profit of 1.6% in 2023.
New location growth has slowed since 2023. At this point, I want to say that maybe this was a play that the company was once enthusiastic about, but it didn’t pan out how they intended. Physical stores probably support their grocery home delivery efforts, but that’s about it.
We have a little over a month before their next earnings call and we get a better idea of Amazon’s finances. Naturally, it is tough to find their profitability numbers scattered somewhere online. In the meantime, here is a relatable blog post that I found with a nice insight into the grocery arm:
Amazon Fresh Needs To Find Its Identity
Thank you for reading my blog. This was a brave and questionable choice of yours, but thank you. Have a great week!
Frank.
