If you thought the ultimate Internet retailer couldn’t get any bigger, think again. Amazon.com recently announced plans to expand its online grocery business. For the past five years, Seattle has been the testing ground for “AmazonFresh,” which delivers fresh produce and groceries to customers’ homes. Now, Amazon plans go beyond Seattle and in to as many as 20 other urban areas in 2014.
The current industry buzz is that Amazon will quickly dominate the online grocery market. Why? Because there isn’t a lot of strong competition – and with good reason. Online grocery sales are tough market with low margins. Many of its challenges are associated with product fulfillment, especially storage and logistics management.
First and foremost, groceries require sophisticated, full-featured warehouse services. Climate control, expiration dates, and general warehouse conditions all need to be accounted for. At Fulfillment Works, our warehouse is a climate-controlled, FDA registered facility. On top of that, our state-of-the-art fulfillment system fully manages expiration dates and is set up to effectively manage the returns process as required by the FDA. That makes us perfectly suited for non-perishable grocery items such as coffee, energy bars, drink powders, and cooking oils. We also offer nutritional supplement fulfillment for items like herbal and dietary supplements.
Amazon’s ambitions are beyond even that, however. Because they plan on offering fresh produce such as eggs, fruit, and meat, they’ll need to operate their own fleet of delivery trucks with strategically placed warehouses. Many industry experts think Amazon will make a splash with online groceries, but will do so at a loss or with low-margins. Then again, they’ve tested the model for a long time now. Only time will tell just how successful this e-commerce venture will actually be.