AmazonFresh to be scaled back in the U.S.

Posted by Nicholas Nakos on 6th November 2017

Amazon is ending its fresh food grocery offerings delivery service AmazonFresh in parts of nine states in the U.S. from December 1, 2017.

Shoppers living in certain parts of Connecticut, Massachusetts, Virginia, New York, New Jersey, Delaware, Maryland, Pennsylvania and California will see the service cease.

Major cities like New York, Boston and Chicago will retain access to Fresh, an Amazon spokesperson said.

AmazonFresh’s expansion has been slow

Amazon launched its Fresh service in Seattle in 2007.

By and large, Amazon has struggled to grow the grocery ordering and delivery service.

It took five years for the company to expand its Fresh offering to a second city.

AmazonFresh is now available in a handful of American cities and internationally in Paris, Tokyo and Berlin.

The rapid growth of the e-grocery industry has meant that AmazonFresh has gained loyal customers, with the scaling back of the Fresh offering being a surprise.

Amazon recently acquired Whole Foods Market

In August 2017, Amazon acquired Whole Foods Market, an American grocery store chain with 460 stores in 42 U.S. states. Amazon purchased Whole Foods for US$13.7 billion.

Amazon’s Chief Financial Officer Brian Olsavsky said the company’s various grocery assets will go hand-in-hand soon.

“There will be a lot of work together between AmazonFresh and Whole Foods,” he said.

Whole Foods has meant that Amazon has gained not just a grocery retail chain, but delivery hubs and distribution centres across the United States.

How popular is online grocery shopping?

Amazon has embarked on a much published move to establish itself in the Australian market.

Roy Morgan Research said that online grocery shopping remains a niche in Australia, with only 3 per cent of Australian’s shopping online in any given four-week period.

4.2 per cent of Woolworths shoppers do so online, with four per cent at Coles and 1.4 per cent at Aldi.

Citi Analyst Brian Raymond said that AmazonFresh in Australia is attractive because it is convenient, not cheaper than supermarkets.

“The risk to Australian supermarkets was mostly around losing sales volume rather than having prices slashed,” Raymond said.

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