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The Chicago Sun Times suggests in a piece this morning that with Amazon's decision to begin rolling out its Amazon Fresh service to Los Angeles (this week) and San Francisco (later this year) comes the probability that it will also expand into Chicago - a market that already has been softened up by Ahold-owned Peapod, which has been providing online grocery ordering and delivery for years.

Tony Stallone, vice president of merchandising at Peapod, says such competition is inevitable. “We think it’s going to enlarge our customer target base,” he says. “People will become more aware of it and ultimately help us build our business.”
KC's View:
Chicago would be a perfect market for Amazon in a lot of ways - the broad awareness of online grocery ordering plus the geography of the place would likely make it a market where the company could ramp up easily.

There are some retail experts - far more distinguished and astute than I - who seem to believe that whatever Amazon does, there is no way that the online grocery business will ever generate more than 10 percent of the total business. While I think this certainly seems likely in the short term, and I'm aware of the tact that during the internet bubble there were a lot of crazy numbers being bounced around about the category's potential, I would never presume to put a cap on what online grocery can achieve.

The thing is, we don't know. If this is a nine inning ballgame, we're only in the second inning. Maybe the top of the second.

There are so many ideas and concepts that have not yet been generated, so much money that has not yet been plowed into the online grocery business, so many smart people who have not yet begun to come up with notions about how to change and evolve the model ... to say that it'll only hit 10 percent seems myopic to me.

It is the company that we've not het heard of, created by someone we're not yet aware of, using a concept that we've never even dreamed of, that will really change things.

If I were a traditional grocery retailer, I think that this is what I'd be looking for, and I'd even consider throwing some seed money at people and companies that show the potential to rock my world and change my life. Because these people and companies are going to rock my world and change my life anyway, and better they should do it with my money, with my company having some skin in the game, than they do it for someone else. That someone else, by the way, would be the competition.