Amazon’s recent move to put on hold all expansion plans in the grocery segment might give the impression of the company really faltering with its food supply business though the fact is, Amazon has rather big plans in the segment. As CEO Andy Jassy revealed to the Financial Times, the company would be opening new physical stores and will be doing a lot of new things that can well disrupt the grocery segment that already is valued at a whopping $1.6tn in the US.
The CEO also said the uncertainty Amazon is facing in its grocery business has a lot to do with the lack of normalcy that the company had to endure during the pandemic. Also, scaling back its expansion plans while stuttering a few stores has led to a $720 million impairment in Q4, 2022. Many of the stores started operating during the pandemic, which means it could be sometime more before things start to settle down to the new normal.
“We’re experimenting with selection, checkout formats, assortment, price points. I’m encouraged we have several that I think are promising,” Jassy said. “We have a history of doing a lot of experimentation and doing it quickly. And then, when we find something that we like, doubling down on it, which is what we intend to do.”
It has been five years since Amazon had acquired Whole Foods for $13.7 billion. That has been the largest acquisition the company has ever made. However, Amazon said there has only been a 10 percent growth in its revenue from the physical stores since the mega deal. That again makes for just a meagre 3 – 4 percent of the Amazon’s entire business. All this in spite of founder Jeff Bezos stressing on building the company’s grocery arm, something that he is still there for as an executive chair even if he has stepped down as the CEO in February 2021.
It is going to be interesting to see what strategy Amazon adopts to develop a strong presence in the grocery segment. As a recent survey has revealed, Walmart already has the lead here with Amazon Fresh placed in the second spot.
With a keen interest in tech, I make it a point to keep myself updated on the latest developments in technology and gadgets. That includes smartphones or tablet devices but stretches to even AI and self-driven automobiles, the latter being my latest fad. Besides writing, I like watching videos, reading, listening to music, or experimenting with different recipes. The motion picture is another aspect that interests me a lot, and I'll likely make a film sometime in the future.
