Executive Briefings

Amazon and Whole Foods Could Revolutionize Grocery Delivery - But Do Shoppers Want It?

A giant in the technology industry had a bold idea: reinvent the way people shop, rendering grocery stores a quaint reminder of the past.

Amazon and Whole Foods Could Revolutionize Grocery Delivery — But Do Shoppers Want It?

That company was Webvan, and it attracted $800m in funding before filing for bankruptcy at the peak of the dot-com bust nearly two decades ago. The lesson in all this? Building a grocery business on wheels is terrifyingly expensive and inherently difficult because many shoppers simply aren't ready to outsource their supermarket visits.

“Many people want to touch and feel their groceries,” said Peter Relan, the former head of technology at Webvan. “In focus groups, we found there was some deep evolutionary biology there. People said, ‘You’re not going to do what I’m going to do for my family.’ ”

It’s a challenge that continues to ring true today, even as interest in grocery delivery services has risen — culminating in recent news that the biggest of all e-commerce platforms, Amazon.com Inc., had bid $13.7bn for one of the biggest names in the grocery industry, Whole Foods Market Inc.

The question now is whether the partnership between the two established firms will finally blow grocery delivery past its niche interest into the mainstream. Consumers ultimately got used to browsing for books online rather than on bookstore shelves; and they got over the fact they couldn’t try on clothes before shelling out cash online. E-commerce sales now total 8.5 percent of all retail sales in the U.S., according to the Department of Commerce, doubling its share since 2010.

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That company was Webvan, and it attracted $800m in funding before filing for bankruptcy at the peak of the dot-com bust nearly two decades ago. The lesson in all this? Building a grocery business on wheels is terrifyingly expensive and inherently difficult because many shoppers simply aren't ready to outsource their supermarket visits.

“Many people want to touch and feel their groceries,” said Peter Relan, the former head of technology at Webvan. “In focus groups, we found there was some deep evolutionary biology there. People said, ‘You’re not going to do what I’m going to do for my family.’ ”

It’s a challenge that continues to ring true today, even as interest in grocery delivery services has risen — culminating in recent news that the biggest of all e-commerce platforms, Amazon.com Inc., had bid $13.7bn for one of the biggest names in the grocery industry, Whole Foods Market Inc.

The question now is whether the partnership between the two established firms will finally blow grocery delivery past its niche interest into the mainstream. Consumers ultimately got used to browsing for books online rather than on bookstore shelves; and they got over the fact they couldn’t try on clothes before shelling out cash online. E-commerce sales now total 8.5 percent of all retail sales in the U.S., according to the Department of Commerce, doubling its share since 2010.

Read Full Article

Amazon and Whole Foods Could Revolutionize Grocery Delivery — But Do Shoppers Want It?