Amazon Fresh – shaking up the retail food sector in the US & UK, by creating a better way from farm to fork

Posted by AFN Staff Writers on 27th June 2016

Online ShoppingAmazon Fresh, an online-only grocery delivery service, entered the US market in 2007. An Amazon executive says the US $338.7 billion retailer could launch its fresh and frozen food delivery service, known as Amazon Fresh, in Australia as early as next year – and could quickly snaffle billions in sales in a grocery market worth $90 billion.

Amazon doesn’t set up any physical retail locations, but handles orders via their website and delivers groceries direct to customer. If Amazon were to roll this out worldwide there are huge business value benefits for the farmer and food processor. Bringing them closer to the consumer than ever before.

There’s an established and growing market in Australia for Amazon, with online grocery sales in Australia reaching $2,194 million in 2015. This is up 14.6 per cent from $1,914.2 million in 2014 and is predicted to grow according to market research organisation IBIS World.

Australian Food News has also reported that global retail giant Amazon could be preparing to enter the Australian grocery market, with an advertisement for a software development engineer in Brisbane for Amazon Fresh.

The Amazon Fresh model is already tried and tested in the US. Amazon has a strong brand name and reputation worldwide. They have a proven system, an established customer base that trusts the brand, existing infrastructure and the ability to scale quickly.

Top 4 reasons Amazon Fresh could benefit your fresh food & food processing business: a ripe consumer base you are much closer to.

  1. Profit margin can only go up. By avoiding retail giants more margin is retained.
  2. Relationship with consumer improves. The relationship becomes closer to a direct line and open communication lines are opened.
  3. A controlled brand experience. The brand can personally address and monitor perception or quality issues.
  4. Complimentary products launched to a ripe consumer base you control. Eliminating the rigours of a supermarket accepting a new line.

The digital disruption to the food industry will continue driving change and create many new opportunities for food producers. Ask yourself, with Amazon Fresh or similar business models coming to Australia, what should you do to prepare for this change?