June 16, 2006
The Alpha Marketer
On May 25, Amazon.com quietly added food to its product categories through a beta page. Interesting in that it was one of the largest losers of the dot-com bust.
At this time they're limiting the offerings to non-perishable items that are packaged, boxed and canned. The one strength that Amazon has in this area is that they can offer delivery to any market and not be limited to specific areas.
This is a reflection of the slowing sales that Amazon has been going through with the growing competition. While they have had increased spending on technology and content, it has been slow to attract new customers and preserve current customers' loyalty.
Amazon spokeswoman Tracy Ogden said, "We try and offer our customers one-destination shopping where they can find everything they need, and groceries are something our customers have been asking for, as with any of our stores, we are always looking to increase our selection."
Right now there isn't a lot of competition in this sector, although Peapod (remember them?) is still around and has a presence in nine states. A few of the brick-and-mortar stores offer online purchases in limited markets.
Obviously Amazon has reached its potential in their existing categories. It is going to be interesting to see how and if they can pull themselves up and increase sales with their existing business model. They have said in the past that they are going to remain a pure Internet company, we'll see if shareholders will go along with that if sales continue to be slow.
