 | AmazonFresh 2016Release date: October 20th, 2015 (147 pages) PDF/Powerpoint format. Price: GBP1,990.00 |
Abstract
With AmazonFresh Jeff Bezos is once again disrupting his very own business, by combining all the latest thinking into a new venture - offered to its most valuable and loyal customers only.
The integration of 1 hour delivery, perhaps fulfilled through a Uber style system called flex, new fresh ranges, which will encompass Far- mer’s markets products as well as restaurant take away food and the bet on the Internet of Things, with the dash technology, promise to revolutionise online grocery and also online retailing yet again.
Amazon’s innovations will drive shopper behaviour change - and change will happen very fast.
Amazon has tested its Fresh model in the US to destruction and has rolled out different innovations and features at same time, at speed, at a massive scale. Now the company has decided it is ready to roll out the service in the EU in 2016.
FMCG and other retailers should remember that Amazon will leve- rage its platform and marketplace model and that the threat will not only come from 1P, but from the multitude of artisanal players (butchers, bakers etc) Amazon will recruit to its ecosystem.
Amazon knows their shoppers already - from their past purchases and their digital footprint and they know shoppers much, much bet- ter than the competition. For Amazon it is now simply a matter of upselling.
What can the rest of the industry do now?
Table of contents
| Executive summary | p12 |
| Business model explained - introduction | p16 |
| Amazon: three different business models, .com (1P and 3P), Pantry and Fresh | p17 |
| Recent key developments | p18 |
| November 2013: Grocery private label push | p19 |
| November 2013: Sunday delivery in New York and LA | p20 |
| December 2013: San Francisco becomes third Fresh market | p21 |
| December 2013: launching Pantry, another online grocery model | p22 |
| December 2013: launching Pantry | p23 |
| June 2014: soft launch of local takeout service to rival Seamless | p24 |
| September 2014: Coca-Cola’s 90s favourite Surge soft drink is revived | p25 |
| October 2014: Fresh entering Brooklyn, order threshold of $35 | p26 |
| October 2014: Bozzuto’s to supply Fresh in New York | p27 |
| October 2014: Bozzuto’s – click & collect options? | p28 |
| November 2014: AmazonFresh in Philadelphia, using NY template | p29 |
| December 2014: Takeout & Delivery is officially launched in Seattle | p30 |
| December 2014: Private label nappies introduced.....then recalled | p31 |
| February 2015: Prime Now available across Manhattan | p32 |
| March 2015: Amazon Dash button and scanner released | p33 |
| April 2015: Amazon cheapest groceries provider in New York | p34 |
| June 2015: Prime Now launches in the UK | p35 |
| June 2015: preparations for the UK launch of Fresh | p36 |
| June 2015: bundling FMCG supplier trips in Germany | p37 |
| June 2015: Amazon relaunches private label grocery products after diaper fiasco | p38 |
| June 2015: Amazon grocery drive thru plans in the US | p39 |
| July 2015: Food added to Amazon Italy | p40 |
| August 2015: AmazonFresh comes to the UK | p41 |
| August 2015: Prime Now starts in Seattle, Amazon Flex sees the light of day | p42 |
| September 2015: Amazon’s drive through concept stalled | p43 |
| September 2015: Dash is widened from trial to all Prime shoppers in USA | p44 |
| September 2015: preparing the Prime Now roll out in Germany | p45 |
| September 2015: USA – Prime now launches in Seattle, selling alcohol | p46 |
| September 2015: USA – restaurant deliveries in Seattle, a Spotlight update | p47 |
| September 2015: AmazonFresh UK launch, AmazonFresh comes to London | p48 |
| October 2015: Fresh starts in London | p49 |
| October 2015: preparing the Fresh roll out in Munich | p50 |
| October 2015: Germany - Prime Pantry launch | p51 |
| October 2015: USA – organic farmers markets, the Fresh Nation trial | p52 |
| October 2015: USA – South California and NY first, the GoodEggs warning | p53 |
| October 2015: Dash integrated into IOT devices, Samsung, GE as partners | p54 |
| The context: US Online Grocery Retailing in 2015 | p55 |
| Online grocery sizes: US, 2006-2014 in $bn | p56 |
| Forecast 2015-2018: data, US Online grocery in $bn, sizes to more than double | p57 |
| Amazon: US Online Grocery in 2015/6, the .com business | p58 |
| USA: Amazon.com (1P and 3P) grocery strategy | p59 |
| Amazon Annual Best Sellers US Grocery, September 2014-2015, 1 – 25 | p60 |
| USA: Amazon annual best sellers in the grocery category, health & wellness niche | p61 |
| USA: Coffee capsules and baby products | p62 |
| USA: Annual best sellers in grocery, average pricing, buy now box, active sellers | p63 |
| USA: 3P issues and problems | p64 |
| Amazon Pantry – the attack on Costco | p65 |
| Pantry: targeting the Costco shopper, box helps logistics and drives sales | p66 |
| Pantry: cleaning up legacy issues, all 1P, subscribe & save on overdrive | p67 |
| Amazon Annual Best Seller USA Pantry, March 2014-2015, 1 – 25 | p68 |
| USA: Amazon annual best sellers, Pantry – addressing a different shopper | p69 |
| AmazonFresh – tying the strategy together, the attack on Walmart | p70 |
| AmazonFresh: the crown jewel | p71 |
| AmazonFresh: late cut off points, challenges require major rethink | p72 |
| AmazonFresh: Seattle spotlight, grocery marketplace version 2.0, heading to California | p73 |
| AmazonFresh: the LA expansion, the Prime Fresh offer | p74 |
| AmazonFresh: Fresh as mix calculation and loss leader? Fresh as ecosystem? | p75 |
| AmazonFresh – data and strategy | p76 |
| Fresh: Data, key customer statistics, uplifts, basket sizes, the reasons behind Fresh | p77 |
| Fresh: Fresh category size, handling problems, roll out of same day delivery network | p78 |
| Fresh: where is Fresh going? Importance of 3P for Fresh, Spotlight expansion | p79 |
| Outlook: online grocery in the US | p80 |
| USA: Outlook for online grocery in the US | p81 |
| USA: Outlook for online grocery in the US – an online polarisation? | p82 |
| EU Grocery Retailing in 2014 – Online sizes | p83 |
| Online grocery sizes: EU 27, 2009-2014 in €m e | p84 |
| Online grocery sizes: the transformation of the sector, analysis | p85 |
| Online % share of total grocery 2011-14: EU 27, UK, France, Benelux | p86 |
| Online grocery sizes: Scandinavia a hotbed of development, tough German market | p87 |
| Online grocery sizes: CEE the opportunity, driven by Auchan, Tesco et al | p88 |
| Forecast for EU online grocery | p89 |
| Online grocery sizes: EU Growth rates and forecast to 2017, when will AMZN Fresh arrive? | p90 |
| Forecast 2009-2019: data EU Online grocery in €m, exponential growth | p91 |
| AmazonFresh: the strategy in the EU, roll out in 2016 | p92 |
| AmazonFresh: the EU strategy, shelf stable added everywhere | p93 |
| AmazonFresh: the EU strategy, Fresh in UK and Germany first | p94 |
| AmazonFresh: coming to the UK | p95 |
| UK: AmazonFresh’s first foreign market | p96 |
| UK: the UK roll out, facing tough competition from Tesco | p97 |
| UK: How will Fresh’s entry affect the competition? Ocado under threat | p98 |
| UK: How will Fresh’s entry affect the competition? Asda and Sainsbury’s | p99 |
| UK: AmazonFresh targets 2% market share, dash introduction | p100 |
| AmazonFresh: coming to Germany | p101 |
| Germany: Germany has become Amazon’s most important foreign market | p102 |
| Germany: Amazon 1P and 3P delivery issues | p103 |
| Germany: expansion of grocery ranges, will $299 Prime fresh fee work in Germany? | p104 |
| Germany: stats and the crucial importance of the 3P sellers on the marketplace | p105 |
| Germany: Amazon PL grocery product in Germany, first market launch | p106 |
| Strategy section | p107 |
| Strategy: Amazon’s strategic tool kit with Fresh - dash, all online food needs | p108 |
| Strategy: Amazon’s strategic tool kit with Fresh – in and outbounding, private label | p109 |
| Strategy: Connected kitchen devices – Dash buttons | p110 |
| Amazon Dash: scan and button, Prime for now | p111 |
| Amazon Dash: Amazon Dash as FMCG giants’ tool | p112 |
| Amazon Dash: Prime conversions on grocery at 60% | p113 |
| Others: Chronodrive partnership with Hiku, Waitrose, Carrefour Belgium | p114 |
| Carrefour: connected kitchen in Belgium, a great step forward in food retailing? | p115 |
| Connected kitchen devices: 5 common characteristics and benefits | p116 |
| Connected kitchen devices: pointing towards the internet of things | p117 |
| Connected kitchen devices: moving to the Apple watch? | p118 |
| The benefits – Darty | p119 |
| Connected kitchen devices: the Darty stats | p120 |
| Strategy: Comprehensive food offer – with takeaways and organic farmers markets | p121 |
| Strategy: focus on local, recreating the online marketplace in the physical world | p122 |
| Strategy: replicating the retail model in foodservice, travel falters | p123 |
| Strategy: Fresh becoming more than the sum of its parts, looking to take-aways | p124 |
| Strategy: Recipe bag solutions next? | p125 |
| Strategy: Reorganising inbound product flows – bundling supplier trips | p126 |
| Fresh inbound: bundling FMCG supplier trips in Germany and the US | p127 |
| Fresh inbound: bundling supplier trips – potential to flip the model? | p128 |
| Strategy: Flex as Amazon’s own Uber? A proprietary Instacart for Fresh? | p129 |
| Last mile: Amazon Flex, will it work for Fresh? | p130 |
| Amazon Flex: Amazon’s very own Uber, Instacart and Postmates | p131 |
| Amazon Flex: Towards an Uber-model for grocery? | p132 |
| Amazon Flex: The scale of Uber, the more drivers, the quicker the service | p133 |
| Strategy: Private label | p134 |
| Amazon private labels: the threat to suppliers | p135 |
| Elements: Amazon relaunches private label grocery products after diaper fiasco | p136 |
| Elements: the learnings for the future | p137 |
| Recommendations for FMCG – the fall out from AmazonFresh | p138 |
| Recommendations: FMCG partners, what to consider, Pantry vs Fresh vs .com | p139 |
| Recommendations: model out profitability for the next ten years on line by line basis | p140 |
| Recommendations: Omnichannel players, launching a 3P operation | p141 |
| Outlook: the AmazonFresh opportunity going forward | p142 |
| Outlook: AmazonFresh: Possible hurdles, Prime fees, supplier relationships | p143 |
| Outlook: fresh as the category killer growth opportunity, but also it simply has to work | p144 |
| Outlook: fresh as a logistics investment; more warehouses, more stock, higher op costs | p145 |
| Outlook: Looking ahead to take-aways | p146 |
| Sources | p147 |
| Chart 1: Online grocery sizes: US, 2006-2014 in $bn | p56 |
| Chart 2: Forecast 2015-2018: data, US Online grocery in $bn, sizes to more than double | p57 |
| Chart 3: Fresh: Data, key customer statistics, uplifts, basket sizes, the reasons behind Fresh | p77 |
| Chart 4: Forecast 2009-2019: data EU Online grocery in €m, exponential growth | p91 |
| Chart 5: The benefits – Darty | p119 |
| Table 1: Amazon Annual Best Sellers US Grocery, September 2014-2015, 1 – 25 | p60 |
| Table 2: Amazon Annual Best Seller USA Pantry, September 2014-2015, 1 – 25 | p68 |
| Table 3: Online grocery sizes: EU 27, 2009-2014 in €m e | p84 |
| Table 4: Online % share of total grocery 2011-14: EU 27, UK, France, Benelux | p86 |
