For Amazon, Now Comes the Hard Part -- WSJ -2-

For Amazon, Now Comes the Hard Part — WSJ -2-

Titan web joined a crowd with its entire food agreement; The ‘last mile’ puzzle
With Amazon.com Inc. suddenly rolling in the hall of the grocery store selling food can never be the same.

Retail food was already struggling with low margins and slowing sales growth, while buyers have changed buying patterns. The new players invaded the crowded market, the grocery store, ranging from Wal-Mart Stores Inc. and Kroger Co. giants to smaller chains struggling to attract consumers, largely by lowering prices .

And the industry has tried to figure out how to sell fresh food online.

The agreement with Amazon to buy Whole Foods Inc. can add saturated marketplace as it puts more own food into the distribution system, while putting pressure on the new food store to learn how to sell food cool online, so the Internet giant did not beat them. The agreement is “a seminal moment in the consumer world,” said David Palmer, an analyst at RBC Capital Markets LLC.

It is not at all clear whether the king of e-commerce can make fresh cabbage what he did on CDs, books and almost everything else. Amazons and whole foods have always combined a small fraction of Wal-Mart at the grocery store. And Amazon faces a “last kilometer” logistics problem of eating fresh food to the door that is not with other products.

“This is going to be one of the most difficult areas to implement,” said Kent Knudson, a partner at Bain & Co., “because of some physical problems with food at home.”

Challenges for groceries today include a new reality: the days when buyers buy wagons for a great weekly trip to their local grocery store will appear for now. Consumers are more oriented in their buying habits. They are less loyal to retailers and more willing to buy groceries online. And they buy more polos in discount stores: those, and those that offer high-quality fresh food, with increasing frequency.

Last year’s grocery sales declined after 2015, after having risen more than 2% over the previous three years, according to market research firm Nielsen. Kroger ended 13 years of same-store quarterly sales increase this year, while Wal-Mart, which receives more than half of its grocery sales, and Target Corp., have also had problems.

Consumers want “convenience, selection and good prices and they want it now,” said Natalie Kotlyar, head of consumer business affairs with the US consulting firm BDO. “Everyone is trying to merge these concepts to Create the perfect shopping experience. ”

Amazon, which has revolutionized the way people buy, gamble, can learn the business and solve at least part of the puzzle. He was willing to give up profits for years to build market share in an industry. He has money to burn, extensive experience in logistics and a record of imminent supplier cost reduction. And their great push in fresh foods will likely require other food retailers to accelerate efforts to operate e-commerce so they can remain competitive.


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