Never let it be said that Amazon slows down, even during the holidays. The Wall Street Journal reports that Bezos’ behemoth has plans to add more Whole Food stores across the country so its two-hour grocery delivery service can reach even more people.
If true–The Journal’s story is based on “people familiar with the plans”–the news isn’t terribly surprising. Amazon is very competitive and has a history of sacrificing profitability for aggressive growth. A Progressive Grocer report earlier this year ranked Amazon as the eighth largest grocer in the U.S. And although Amazon is the leader in online grocery sales, a recent report from Brick Meets Click shows that shoppers spend way less with Amazon than they do with other grocery retailers.
Walmart, the largest grocer in the U.S. has 4,700 American locations, and the company says it has a store within 10 miles of 90 percent of the population. Walmart was on track to make same day delivery available to 40 percent of the U.S. population by the end of this year, and has a goal to make it available to 60 percent by the end of next year.
Whole Foods, on the other hand, has 470 locations (including in the U.K. and Canada) with two-hour delivery available to Amazon Prime members in 63 cities. So you can see how Amazon is playing catch up here. The question is how they will catch up, and that’s not just about the number of stores.
Part of The Journal story says that some of the spaces Amazon is looking at are slightly larger than the average Whole Foods locations, with the extra space being use for delivery and pickup. Does this mean that Amazon could be jumping on the in-store robot fulfillment center bandwagon?
Albertsons, Ahold Delhaize and Walmart are building out robot fulfillment centers in their stores to facilitate super-fast online grocery order fulfillment (Kroger is building out dedicated standalone robot warehouses). Amazon is already big into robotics in its warehouses, and started experimenting with half hour grocery pickup in select Whole Foods. For a company dedicated to efficiency and speed, it wouldn’t be a surprise to see some sort of automation being built into new locations from the ground up.
Amazon’s purchase of Whole Foods in 2017 scared and catalyzed the grocery industry into spending money and innovating throughout 2018. If Amazon is ramping up its geographical presence, and it seems likely it will, buckle up because 2019 is going to be a wild ride for everyone in the grocery game.