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Amazon offers its customers three different grocery concepts, namely Whole Foods, Amazon Go, and Amazon Fresh along with the popular Amazon Prime. Amazon has set a number of operational processes in place. The company both contracts with local and regional suppliers for direct delivery and operates its own warehouses that use state-of-the-art robotics to enhance inventory management.
Amazon has already sought trademarks for 24 food segments and has approached private brand manufacturers to build up partnerships. To offer a wide assortment of products, Amazon operates its own warehouses for supplies across the country and also partners with local suppliers to replenish stocks.
Amazon uses its own refrigerated delivery trucks that use optimized and predetermined routes, as well as exclusive partners via Amazon Flex and Amazon Logistics that solely work for Amazon. Amazon is planning to open locations in shopping centers in San Francisco, Seattle, Chicago, Washington D.C. and Philadelphia for it’s grocery business and is looking into acquiring regional grocery chains so it can compete with the big giants in the market.
To further expand and dominate the market, Amazon will have to open more stores in the United States to challenge the likes of Walmart or Kroger. By expanding the grocery business, Amazon understands that if they can establish a leadership position in groceries—even though it is a low-margin business—Amazon will attract more customers to buy its higher margin products sold online and this will pave the way for more sales.
To attract more customers, Amazon was offering a discounted version of its Prime membership service to folks who qualified for medicaid and government assistance programs. Amazon could plan more pickup and delivery points to meet customer demand, help it gain data about shoppers, and introduce its expanded lineup of food and personal care brands in the long run to compete successfully in the physical grocery store business.