Amazon Getting Into the Grocery Deliver Game

A blog about business and economics.
June 4 2013 4:14 PM

Look Out, Supermarkets—Amazon's Coming to Destroy You While Losing Money Delivering Groceries

An Amazon employee at Chalon-sur-Saone, central eastern France.
An Amazon employee at Chalon-sur-Saone, central eastern France.

Photo by Philippe Merle/AFP/Getty Images

As I've said time and again, the worst thing that can possibly happen to your business is for Amazon to enter your market as a competitor. They don't make money and they don't care. Now here they come to destroy the supermarket industry:

Amazon is searching for new, large markets to enter as the company tries to maintain a growth rate that has fueled a 220 percent surge in its shares over the past five years. The grocery business in the United States, which generated $568 billion in retail sales last year, may be a ripe target.

Amazon's strategy is to grow, grow, grow, grow, grow, and the fresh groceries market is a growth opportunity. Some misguided naysayers think it won't work:

Roger Davidson, a former grocery executive at Wal-Mart, Whole Foods and Supervalu, said Amazon will struggle to make money from AmazonFresh because fresh produce can easily go bad in storage warehouses and get damaged during delivery—something known as "shrink" in the business.
Advertisement

This completely misunderstands Amazon's corporate strategy. They struggle to make money from Prime streaming video. They struggle to make money from Kindle hardware. They struggle to make money in all their lines of business, which is why they don't make money. What Amazon makes is sales. And they're really good at it. I buy lots of stuff from Amazon as it stands, and I can't wait to start using them for grocery delivery, too. I just hope my city is one of the places where they roll this out. Grocery delivery service already exists in D.C., but it's pretty crappy and I'm sure Amazon can do better with it. Can they make a profit with it? I don't care and they don't care either. But if I were a supermarket executive, I'd be trembling with terror right now.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

Jurisprudence

Scalia’s Liberal Streak

The conservative justice’s most brilliant—and surprisingly progressive—moments on the bench.

Colorado Is Ground Zero for the Fight Over Female Voters

There’s a Way to Keep Ex-Cons Out of Prison That Pays for Itself. Why Don’t More States Use It?

The NFL Explains How It Sees “the Role of the Female”

The Music Industry Is Ignoring Some of the Best Black Women Singing R&B

Culturebox

Theo’s Joint and Vanessa’s Whiskey

No sitcom did the “Very Special Episode” as well as The Cosby Show.

Television

The Other Huxtable Effect

Thirty years ago, The Cosby Show gave us one of TV’s great feminists.

Cliff Huxtable Explains the World: Five Lessons From TV’s Greatest Dad

Why Television Needs a New Cosby Show Right Now

  News & Politics
Weigel
Sept. 18 2014 8:20 PM A Clever Attempt at Explaining Away a Vote Against the Farm Bill
  Business
Moneybox
Sept. 18 2014 6:02 PM A Chinese Company Just Announced the Biggest IPO in U.S. History
  Life
The Slate Quiz
Sept. 18 2014 11:44 PM Play the Slate News Quiz With Jeopardy! superchampion Ken Jennings.
  Double X
Doublex
Sept. 18 2014 8:07 PM Crying Rape False rape accusations exist, and they are a serious problem.
  Slate Plus
Behind the Scenes
Sept. 18 2014 1:23 PM “It’s Not Every Day That You Can Beat the World Champion” An exclusive interview with chess grandmaster Fabiano Caruana.
  Arts
Brow Beat
Sept. 18 2014 4:33 PM The Top 5 Dadsplaining Moments From The Cosby Show
  Technology
Future Tense
Sept. 18 2014 6:48 PM By 2100 the World's Population Could Be 11 Billion
  Health & Science
Science
Sept. 18 2014 3:35 PM Do People Still Die of Rabies? And how do you know if an animal is rabid?
  Sports
Sports Nut
Sept. 18 2014 11:42 AM Grandmaster Clash One of the most amazing feats in chess history just happened, and no one noticed.