News broke today that Amazon will be acquiring Whole Foods for $13.4 billion.
There are a lot of interesting angles here, but of course I’m particularly interested in the autonomous vehicle angle.
Amazon has generally been wildly successful (understatement?), but it has had a hard time cracking the grocery market.
“…the e-commerce giant has long wanted to figure out the online groceries game. It started testing delivery concepts in August 2007, when it unveiled Amazon Fresh — delivering produce and pantry staples through its fulfillment centers. Yet even after a decade — eons in Silicon Valley time — it’s still trying. Turns out, the instant gratification business doesn’t quite work with fresh food.”
Forbes goes on to talk about the difficulties inherent to grocery retailing:
“A lot of the stuff you buy in a grocery store spoils easily, which means you have to get them home quickly — plus, someone has to be there to receive the goods. That can be tricky, given how Amazon likes to optimize delivery routes and bundle items to maximize efficiency.
This is precisely where self-driving cars come in. Optimizing delivery routes and bundling become drastically less important when the marginal cost of a delivery plummets by 50% or more.
AmazonFresh Pickup and Amazon Go are new spins on the grocery store, but neither of them seems particularly disruptive — more like a new spin on an old model. And the cognitive load of switching to a new commerce model might not be worth the relatively small benefit.
A deliver-groceries-to-me-right-now service, though, seems like it could make a lot of people think twice about piling into the car to go to Safeway.
David Silver 