Name: Muhammad Hammad

Rana Wajahat
Tawab Ahmed
Rameez, Bilal
Jawwad Ur Rehman
Shahid Ali

Class: BBA 6G

Topic: AMAZON FRESH: REKINDLING THE ONLINE GROCERY MARKET

 Introduction
• Launched by Jeff Bezos, an online bookstore 1994. In 1998 amazon expanded into 2 more retail
categories, music and DVD /videos. Next 14 years, they extend their category, media, electronics,
home and garden, health and beauty, sport equipment, industrial and automotive and fashion.

• At 2012 amazon becomes the world largest online retailer. Revenue generate through its digital
content, computing services. Initially company adopt ‘’sell all carry few’’ approach. Stocking 2000
books in warehouse, other order full filled by book holders or publishers.

• In order to shorten delivery times amazon expended 2 distribution centres to 10 in 1999. In 2012 –
46 distribution centres across us. Customers received in 3-5 days with standard shipping. Also
provide 2 or next day to customers who enrolled in amazon prime.

• Other delivery models are amazon lockers, local express delivery and Sunday delivery. Profits are
redirected to building more distribution centres. More dc - closer to the customer and faster the
delivery.
 An Overview Of The U.S Grocery Industry

Amazon entered, market was already mature and competitive .Groceries represent single retail
category- revenue $ 600 bn.

The Emergence and Failure Of Early Online Grocers

Webvan & home grocers emerged in 1990’s. Aim is to provide quality and selection of whole
food, pricing of Safeway, convenience of home delivery. Amazon invested $42.5 M for 35%
stake, provide user friendly website, promises next day delivery. In June home Webvan
acquired home grocers for $1.2 bn in stock. Webvan filed for bankruptcy a year later.
 Amazon’s Entry Into Grocery

In 2005 amazon had offered selection of 10,000 shelf stable staple and gourmet items.
Amazon fresh was far more than just another category extension, perishable products
required a change in its ware housing and distribution model.

The Evolution Of Amazon Fresh

Launched in 2007. Customer browse over 100,000 grocery items and place a selection
in digital basket. Delivered to the customer to the same day or next day. Emphasize
on value proposition, provide great selection, prices and convenient experience.
Delivery was complimentary, Provide free samples to create a good will.
 Operations

• Suppliers: maintained its own warehouse for nationally supplied items. Also contracted with
local retailers and suppliers of prepared foods.

• Distribution centers: Need dc’s with refrigeration and freezer capabilities. Better to purchase an
existing distribution center from Safeway rather than convert their own warehouses or building
new facilities. They need more floor space – assembling individual orders and required packing
and picking orders.

• Scheduling and routing: Used amazon fresh’s refrigerated delivery trucks – because 3rd party
provider unable to meet amazon’s need. To help allocate deliveries- customers were given a set
of timeslots to choose from.

• Delivery: Customers received their groceries in crates. Used proper temp. For schedule delivery.
Use gel packs to keep product cold, but then replace it to dry ice and frozen bottles to minimize
costs.
 The Website Integration With Amazon

Fresh site lacked the reviews and customized suggestions that amazon’s is known for, it provided
none of recipes, nutrition pointers, and similar features offered by competing online grocers. Made
improvements- customers track past purchases and automatically add favourite items. Coupons
section allowed to clip coupon electronically. Mobile apps to scan barcode on purchased anywhere
and add them to their online shopping basket on amazon.
 CONCLUSION

IN CONCLUSION, AMAZON CONTINUES TO REFINE THE BUSINESS MODEL AS AMAZON FRESH SERVED
PROFITABILITY. MARGIN RELATIVELY LOW AND PENETRATION ONLY 5%. SWITCH TO YEARLY DELIVERY FEE.
THAT APPROACH MIGHT SLOW ACQUISITION OF NEW CUSTOMERS. LEAD TO HIGHER PROFITABILITY DOWN
THE ROAD. INTRODUCE- BUSINESS MODEL INTO A SECOND TEST CITY. ASPECTS OF THE MODEL THAT WERE
MARKET-SPECIFIC FROM THOSE THAT WERE TRANSFERABLE ACROSS MARKETS. AMAZON RUN WITH ITS
CORE WEBSITE, AND MARKET PROMOTE EXPERIMENTATION. A SECOND TEST CITY WOULD OFFER A SUITABLE
GROCERY WAREHOUSE NEAR THE CITY CENTER. TWO CITIES ARE SUITABLE: LOS ANGELES AND NEW YORK.