Can Amazon Succed Where Others Failed
Not a month after comScore comes out with their "over/under" report showing verticals such as grocery and health care where underpenetrated by the Internet Amazon opens up an old wound.
You may not remember PeaPod from back in the bubble days, but others have attempted to solve the grocery dilemma. All previous efforts have been hoisted on the petard of "local delivery".
Local delivery is a logistical killer. Think about it. The last time I went to my Super Target I purchased 20 items for a little over $100. With an Average Order Value of $100 you would have to add a hefty shipping charge.
Problem is my Super Target is almost across the street from my house, so any hefty delivery charge seems a foolish waste of money. Funny how human psychology is because we don't hesitate to pay as much as 100% markup on our pizza to have them delivered.
If Amazon can bring our minds around to the pizza zone they win. The pizza zone is about:
* Being lazy.
* Not wanting to go OUT (to cold, too crowded, whatever).
* Too busy (when I am on deadline it is hard to remember to dress and shower much less cook a meal).
* Too boring (I started selling P&G soap in Wegman's in upstate New York and HATE going to the grocery store).
* Not Fun - shopping is the 3rd circle of HELL for many (me included).
Subscription & Mobile To The Rescue
I think there is a mobile enabled subscription play here. Schwan's has proven home delivery can work. Schwan's limitation is they ONLY sell frozen food. Will we trust someone else to pick our bananas and lettuce? Maybe if they create a creative approach (maybe we get a chance to see what fresh produce they are selecting via an app).
The other way Amazon could resurrect the RIP PeaPod local delivery is to be creative about the money. If I can JOIN and earn social status and points, contribute input and be SOCIAL then grocery shopping is FUN and worth the surcharge.
If anyone can do it Amazon can AND pushing more through their expanded distribution centers only lowers their fixed costs. Amazon is all about the arbitrage so Amazon Groceries could happen and could work.