With its new format, Amazon will pursue mainstream shoppers rather than ones who frequent stores like this Whole Foods Market in San Francisco. (Photo by Ashley Nickle)
Craig Carlson, CEO of Carlson Produce Consulting and a veteran of the grocery retail space, said more clarity is needed on Amazon's grocery ambitions to understand how much of a factor the company will be in grocery.
He noted that it may not make sense from a financial perspective for Amazon to go as all-in as people might expect on physical stores.
“Realistically you also have to question how much brick and mortar Amazon wants to have on its books,” Carlson said. “That's really going to impact their earnings.
“A significant purchase of brick and mortar could be an exposure on their balance sheet that could impact their earnings negatively,” Carlson said. “How big of a footprint will they want to have and how much they want to do that (remains to be seen).”
In addition to some lack of clarity on what Amazon ultimately has planned, execution is obviously a critical component, and grocery distribution is a complex business, with heavy product, plenty of perishable items, and a variety of temperature zones to manage in transit, Carlson said.
“It's going to take them awhile –- doesn't mean they're not going to get there, doesn't mean they don't have the capabilities to, but it's going to take them awhile, and I think the industry will continue evolve and react,” Carlson said. “They're not just going to give it away.”
