Why Amazon Fresh struggles to fit into the grocery market
One of the biggest hurdles for the e-commerce giant to dominate the grocery space is its relatively small presence across the United States compared to deep-rooted retailers (via Grocery Dive). Although the company has opened dozens of Amazon Fresh locations over the past two years, the number of locations is still far behind other retail giants that have already established themselves in the local communities.
“I suspect [Amazon wants] “For competition where they can’t compete, which is local,” Kumil Jagrawala, managing director of Credit Suisse, said during the Groceryshop session. Analysts also cited Amazon’s lack of premium branding or popular private label products as the company’s failure to win loyalty customers from other chains.
“There is no unique differentiation toward what they’re selling, so it’s a very mediocre concept,” noted Rupesh Parikh, senior equity research analyst at Oppenheimer & Co. Inc., including a vegan line that debuted earlier this year (via Grocery Dive), has failed to differentiate itself compared to companies like Trader Joe’s and Target, which have created custom customer bases for their brand offerings.
Although analysts expect Amazon will face an uphill battle when it comes to penetrating the grocery market, the company continues to expand its Amazon Fresh operations across the United States with no signs of slowing down.