Online Retail

Three-Part Recipe for Grocery Dominance

  • Why it matters

    Why it matters

    Amazon’s foray into the German grocery market will likely extend far beyond Amazon Fresh, its recently rolled-out fresh food delivery service.

  • Facts

    Facts

    • Just 10 weeks after Amazon Fresh was launched in Germany, the delivery service offers 100,000 products.
    • By 2020, annual online grocery sales in Germany are expected to climb to between €6 billion and €8 billion, according to consulting firm Oliver Wymann.
    • The number of Amazon employees in Germany is expected to increase by 2,000 to 16,500 by the end of 2017.
  • Audio

    Audio

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Workers put together orders at the Amazon logistics center in Brieselang
An Amazon warehouse near Berlin. Now, where’s that darned needle again? Source: Reuters.

Amazon rolled out its grocery delivery service Amazon Fresh in Berlin and the neighboring city of Potsdam in early May. With a few clicks, locals could now put potatoes, steaks, and soft drinks in their “cart,” select a preferred time frame for delivery, and take possession of their purchases from an express-delivery driver a couple of hours later. Ten weeks after launch, the service was offering 100,000 products, from traditional brands like Coca-Cola to well-known organic ones.

Amazon’s Germany boss Ralf Kleber says Amazon Fresh is still in its infancy. But he’s already planning to make Amazon Fresh available in other German regions, too. It will go live in Munich in the coming weeks, and could expand to the sprawling Ruhr conurbation in western Germany before too long. The “customers’ positive feedback” is charting the course of Amazon Fresh, he says – even if he remains coy about backing that claim with any sales figures.

As a result, it’s hard to tell how successful Amazon’s new German venture actually is. Some suppliers suggest volumes are manageable. One manufacturer said his company used big trucks to deliver goods to the central storage facilities of German retail leaders Edeka and Rewe. “But we’re able to supply Amazon with a small transporter.” What’s more, the relatively high cost of shipping small order volumes is probably digging into the online giant’s bottom line. “I reckon the hype is a bit exaggerated – but of course we want to be a part of it,” he admits. As Mr. Kleber says, it’s only the start.

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