For over two years, Amazon has operated its Prime Pantry service, through which it delivers non-perishable grocery items to customers’ homes. Now the company aims to implement a new program that delivers all grocery items, even those that need refrigeration. Take a look at this new program, called AmazonFresh, and learn how Amazon continues to give consumers exactly what they want.
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Situation: Consumers Want to Shop for Groceries Online
Many people dislike grocery shopping due to the time and resources this frequent chore requires. In fact, saving consumers the hassle of going to the store is the primary reason that online grocery shopping has become popular. Amazon knows how important time is to its customers.
Many major grocery chains, including Walmart, offer online grocery shopping programs that allow you to order your food on the internet and then go to the store to pick it up. The problem is that very few grocery stores have a home delivery program that accommodates refrigerated groceries. Until recently, Amazon only delivered non-perishable food products to consumers because the company did not have a cold supply chain. Amazon wanted that aspect to change.
Approach: Amazon Introduces AmazonFresh
Consumers have been relying on Amazon to buy non-perishable grocery items through Prime Pantry for over two years. To use the service, consumers simply choose their grocery items and pay a standard shipping fee per box.
About a decade ago, Amazon began testing its AmazonFresh concept to determine the viability of delivering refrigerated grocery products like milk and ice cream. Now the service is actually popping up in select markets. Some of the cities participating in AmazonFresh include Los Angeles, San Francisco, New York, Baltimore, and Philadelphia. Boston and London are the company’s next targets.
Grocery delivery comes at a cost to consumers because refrigerated delivery is expensive. It requires specially fitted trucks and an intricate cold supply chain. To help keep delivery costs to a minimum for customers, however, Amazon now offers enrollment in a Prime Fresh membership, which costs $299 per year for unlimited grocery deliveries. So far, feedback hasn’t been all positive. Some customers view the cost as too high, especially considering that it’s an extra fee in addition to the required Amazon Prime membership, which cost $99 per year. Amazon has begun testing different pricing structures in its California markets.
Impact and Advantage
Several delivery services compete with AmazonFresh. After all, refrigerated grocery delivery isn’t a new idea. However, AmazonFresh has become the clear leader because its customer bas is already so vast. As a result, other grocery store supply chains are undergoing serious challenges.
It won’t be long before anyone in the United States will be able to order all groceries online and have them delivered right to the door. Refrigerated delivery is something that many supply chains have been developing. The cost of refrigerated trucks might be higher, but the investment is worth the risk because consumers have embraced the idea of grocery delivery.[/show_to]
