Amazon will reportedly soon sell its own private-label groceries
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Re: Amazon will reportedly soon sell its own private-label groceries
#2This is how Standard Oil completely dominated their market, vertical integration brought prices so low no-one could compete.
Once same-day delivery and/or drone delivery takes off I predict the grocery store market will start to look similar to retail music/book stores.
Re: Amazon will reportedly soon sell its own private-label groceries
#3Most grocery stores have their own brands, even the small to medium regional stores. So this should not come as a surprise that a large store will develop its own brand.
What I do want to see is the packaging. Most items are meant to be sat on shelves, and displayed to the consumers. But Amazon items won't need to sit on store shelves (just distribution centers) and don't need the packaging to sell themselves. Will Amazon come up with novel packaging optimized for delivery, or will it be more of the same?
Re: Amazon will reportedly soon sell its own private-label groceries
#4This is how Standard Oil completely dominated their market, vertical integration brought prices so low no-one could compete. Once same-day delivery and/or drone delivery takes off I predict the grocery store market will start to look similar to retail music/book stores.
Standard Oil's vertical integration brought low prices to what was essentially a process that has a single input and a handful of outputs. The vertical integration of Amazon would involve billions of inputs and billions of outputs. They aren't even remotely comparable, and it is likely that, due to diseconomies of scale, a vertically integrated Amazon would be less efficient than they currently are.
Re: Amazon will reportedly soon sell its own private-label groceries
#5This should surprise no one. Do you purchase things? Amazon's goal is to sell you them. Then, after it figures out how you buy them, they'll work their way up and down the supply chain to improve their margins. Done.
Disclaimer: Former Amazon employee
Re: Amazon will reportedly soon sell its own private-label groceries
#6Most grocery stores have their own brands, even the small to medium regional stores. So this should not come as a surprise that a large store will develop its own brand. What I do want to see is the packaging. Most items are meant to be sat on shelves, and displayed to the consumers. But Amazon items won't need to sit on store shelves (just distribution centers) and don't need the packaging to sell themselves. Will A…
Oh I hadnt thought about this. Intriguing. I feel like this is where they can differentiate themselves.
Re: Amazon will reportedly soon sell its own private-label groceries
#7This is how Standard Oil completely dominated their market, vertical integration brought prices so low no-one could compete. Once same-day delivery and/or drone delivery takes off I predict the grocery store market will start to look similar to retail music/book stores.
Standard Oil's vertical integration brought low prices to what was essentially a process that has a single input and a handful of outputs. The vertical integration of Amazon would involve billions of inputs and billions of outputs. They aren't even remotely comparable, and it is likely that, due to diseconomies of scale, a vertically integrated Amazon would be less efficient than they currently are.
I was talking specifically about Amazon Fresh and the retail grocery market. Not Amazon as a whole.
The input/output dynamics don't change very much in that context (by strictly producing commodity style products), except the potential for higher-margins and more efficient distribution channels.
Re: Amazon will reportedly soon sell its own private-label groceries
#8I cannot foresee how this will play out in the long term for the end consumer.
In the short term, consumers get a whole lot of convenience and lower prices. What happens after a large chunk of other stores have gone out of business?
How would any new player even approach entering the market? It almost seems impossible unless Amazon systematically screws up and leaves a gap for someone to exploit.
Re: Amazon will reportedly soon sell its own private-label groceries
#9Amazon already has their "Amazon Basics" line of products for common items. Groceries should come of no surprise.
Re: Amazon will reportedly soon sell its own private-label groceries
#10I cannot foresee how this will play out in the long term for the end consumer. In the short term, consumers get a whole lot of convenience and lower prices. What happens after a large chunk of other stores have gone out of business? How would any new player even approach entering the market? It almost seems impossible unless Amazon systematically screws up and leaves a gap for someone to exploit.
I guess a new player could offer something novel? Consumers will go for novel food choices over established ones, even if the new one is more expensive or less convenient.
But then what if Amazon systematically clones every new success? Maybe everything will be subsumed into Amazon.