31 October, 2013

You want lamb leg and veggies along with your cookbook?

Melbourne Herald Sun, Thursday October 31, 2013

Late for birthdays, gifts for interstate, seeking a title that's hard to find - bit by bit we have all come round to using Amazon a few times, if not often. But can you see it supplying the meat, Weetbix and veg?

Give it time and that day will come, is the claim, as Amazon.com looks to expand its huge retail business into more areas, across markets and around the world. Already it sells toys, electronics, computers and phones, movies, fashions, cosmetics - its growth is constant.

Last year it lost money, but that has never slowed Amazon's development - for years it continued to grow without making a cent. No it has always looked to its promise, as articulated by the boss Jeff Bezos, and he has expanded the company beyond belief.

They have now spent the past five years establishing and growing the home-delivery grocery business in the Seattle area and just expanded to Los Angeles. San Francisco is promised to follow soon. Warehouses and investments are rumoured around America and the UK has also been primed. No doubt Australia is not too far down the target list.

Of course, mail-order groceries are nothing new down here. Coles have a very sophisticated nationwide system as does Woolworths. And here we have the advantage of the stores and supply chain already fully functioning. Here all the delivery developers had to do was tap in to the supermarket giants' sophisticated existing networks.

Even this took time and a lot of lesson-learning. Groceries are a very tricky commodity. The profit margin on food is much smaller than on clothes and electronics; they have short use-by dates after which everything must be thrown out; and delivering a basket of groceries is not as simple as dropping off a parcel of books.

However they all see the lessons from overseas, to know that online groceries are a huge growth market. In the UK they are far bigger and better established.

The business is making some $10 billion in sales now, and is expected to double that by 2016. France, Germany, Netherlands and Switzerland are a little later on the wagon, but they too are expected to double their growth in the period.

World-wide researchers IGD announced the projections last week, with Britain being closely followed by France, now growing the sector. Joanne Denney-Finch, chief executive of IGD, sees the figures indicating fundamental changes to the way people shop: “Online retailing in food and consumer goods is growing at a phenomenal rate across Europe."

She points out, "Technology is empowering people, fundamentally changing the way they buy groceries. Online shoppers are becoming more demanding and the divisions between online and bricks and mortar stores are blurring."

In the US, mail order goes back to the beginnings of the young nation, so online grocery is no surprise. One of the first entrepreneurs in the country was the great Benjamin Franklin - yes the one with the kite - who sent out catalogues of scientific and academic books.

Right now, Amazon has some formidable competition before it, with equally deep pockets - especially Walmart. They have been trialing for the past two years, using their huge existing stores as regional warehouses for the service.

With so much global focus on the sector it is no longer a fringe activity, this is a market repositioning in action. So I can guarantee it will soon enough touch you and me. If it hasn't done so already.

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