{"id":55,"date":"2016-10-19T15:03:30","date_gmt":"2016-10-19T15:03:30","guid":{"rendered":"http:\/\/reformingretail.com\/?p=55"},"modified":"2019-01-23T05:56:33","modified_gmt":"2019-01-23T11:56:33","slug":"what-amazonfresh-should-teach-entrepreneurs-targeting-brick-and-mortar","status":"publish","type":"post","link":"https:\/\/reformingretail.com\/index.php\/2016\/10\/19\/what-amazonfresh-should-teach-entrepreneurs-targeting-brick-and-mortar\/","title":{"rendered":"What AmazonFresh Should Teach Entrepreneurs Targeting Brick-and-Mortar"},"content":{"rendered":"

I read a great analysis of AmazonFresh recently. The author astutely pointed <\/a>out that AmazonFresh is rarely talked about – which is something of an oddity in the world of technology.<\/p>\n

By comparison, the author explains, AmazonPrime was started in 2005, and Amazon AWS in 2006. Both have become billion-dollar business units on their own and are frequently courted in the press.<\/p>\n

But AmazonFresh continues to languish. Nine years in, Amazon has barely penetrated the US grocery market, with 0.8% of representative marketshare. What’s the issue?<\/p>\n

For anyone who has lived in brick and mortar, we already know the answer: there’s no gas pedal to step on. The laws of scale simply do not apply here. AmazonPrime is a last-mile service that leverages existing parcel delivery companies tied to Amazon’s ecommerce engine. AWS is a cloud service that well-educated software engineers and IT managers know they need.<\/p>\n

Contrast this with AmazonFresh, a company that must transact with brick and mortar establishments, establish its own delivery service for perishables, and keep goods fresh. Three strikes, you’re out!<\/p>\n

Brick and mortar is a long slog. The incumbents are hard to deal with and as a result have inexplicably long sales cycles to even do what’s best for their own business. Sure, it’s great news if you make it: the moat is wide and deep. But it comes at a massive opportunity cost, and it’s why few investors will back companies serving brick and mortar operators. I wouldn’t be surprised if Amazon abandons Fresh to work on its next AWS – where it can make more money, faster.<\/p>\n