The Information reports that Amazon, in both the US and UK, has been "quietly been laying the groundwork to become a major player in a less visible and potentially more lucrative area: the grocery-delivery market, which in the U.S. has largely been the domain of Instacart."
Here's how The Information frames the story:
"Over the last year, Amazon has launched a new business in the U.K. - referred to internally as Amazon Fresh Marketplace - that bears a striking resemblance to Instacart. Prime subscribers can use the Amazon app or website to order groceries from two major U.K. supermarkets, with same-day delivery fulfilled by Amazon Flex drivers.
"The Information has learned that Amazon plans to expand the online grocery-ordering and -delivery program throughout Europe and in the U.S. in 2022. That will put it in direct competition with Instacart as well as other companies expanding in app-based grocery deliveries, such as DoorDash and Uber."
The story notes that "Amazon has been experimenting with grocery delivery for more than a decade now," and in fact it flirted with delivering groceries for other retailers in local markets several years ago, before it had in place the infrastructure that it has now. That left Amazon largely focused on delivering its own products, but an expansion such as the one being planned by Amazon, the story says, "would reflect the strategy that will intensify what is already shaping up to be a bloody battle for market share in the grocery deliver sector next year. Already app-based restaurant-delivery services like DoorDash and Uber’s Uber Eats are ramping up their grocery-delivery efforts. Earlier this year, DoorDash announced a deal to deliver groceries for the Albertsons supermarket chain, and Uber recently acquired grocery-delivery firm Cornershop."
The story says that "Instacart has already made clear it will respond to Amazon’s entry into the market by casting itself as a more reliable ally. Instacart has said it sees Amazon as a major threat to the grocers it partners with, because Amazon’s Whole Foods is a direct competitor."
- KC's View:
I'm sure we will discuss this in tomorrow's Innovation Conversation with Tom Furphy, but my first reactions to this are: a) it totally makes sense for Amazon to do this, and b) like Instacart, it is a kind of Trojan Horse with which retailers should be leery about engaging.
I've been expecting Amazon to offer its growing delivery network to other retailers, and while there may be cases in which it would make sense, giving Amazon any sort of access to shopper data is a prescription for disaster.