Amazon Eyeing Up to 2K Grocery Stores

Many industry observers have predicted that Amazon would move into this sector, looking to fresh grocery to fuel its continued rapid growth - the company has tripled in size over the last five years and accounted for 50 percent of all retail growth in 2015.

Some of the potential locations for these stores are Seattle, Miami, New York, Las Vegas, and the San Francisco Bay Area.

Changes in pricing of fulfilled by Amazon (FBA): Olsavsky also provided some colour on changes to the FBA programme. According to the report, of 20 grocery stores, 10 will be "click-and-collect" drive-up spots for customers to pick up their online orders. Its grocery-delivery service, Amazon Fresh, has been unusually slow to expand, rolling out in only 17 U.S. cities and one overseas location (London) almost a decade after its first launch in 2007. "And the biggest issue you're trying to get at is having the most valuable products for holiday in the warehouse in the Prime space and not having the warehouse filled with things that may not sell until after the New Year". According to the report, it's expensive to open and run physical grocery stores.

AmazonFresh is the arm of Amazon that provides same-day or next-day delivery of groceries ordered online, including perishable and frozen foods.

"We continue to expand AmazonFresh into new regions so that more and more customers can take advantage of the service", said Ben Hartman, VP of AmazonFresh.

Its push to add as many Prime members as possible is costing Amazon a lot as well, with the $99 a year service promising to deliver fast, free shipping to customers as well as a variety of other perks. A report earlier this week cited company documents contemplating building as many as 2,000 Amazon grocery stores following a test of units reportedly under construction in several markets.

Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.

India is the next big retail opportunity for Amazon, after having failed to make much headway in the Chinese e-commerce market dominated by local powerhouse Alibaba. They can also shop AmazonFresh using the mobile Amazon App.

Amazon's financial results for the period, which ended September 30, reflected the retailer's continuing investments in infrastructure to support these services.

This story first appeared on Business Insider.

  • Salvatore Jensen