http://www.thebookstandard.com/book...article_display.jsp?vnu_content_id=1002726179
Amazon.com Out of Control: Now Offering Slim Jims, Honey Nut Cheerios, Kraft Easy Mac Snack Packs
June 21, 2006
SOURCE:Gourmet Retailer
Seattle-based e-commerce giant Amzaon.com has launched an online grocery storea business that proved too complicated for pioneers during the dot-com boom five years ago, reports an article in the San Jose Mercury News.
Amazon quietly launched a test version of its grocery store late last month. It now sells about 15,000 items from diapers to Jell-O that can be ordered like any other product on the site. Standard shipping is free on orders over $25. Shoppers won't find every product at Amazon. Jif Peanut Butter can't be found on the site, but organic peanut butter brands are there. The company focuses on offering organic foods.
"The store was really a natural progression,'' said spokeswoman Tracy Ogden. She said Amazon will add more items as customers demand them; a typical grocery store has about 45,000 items.
The grocery store mainly sells products in bundles, much like those found at a Costco or Sam's Club. Late Thursday, the site's most popular itemswhich are updated hourlyincluded diapers, Lipton Green Tea To Go and Clif Bar nutrition bars.
"This is an umbrella and we can offer anything our customers really want,'' Ogden said.
Experts predict that Amazon's adventure won't conclude like Webvan, the Foster City-based company that spent millions on a climate-controlled warehouse network before going bankrupt in 2001. Unlike Webvan, Amazon is selling only non-perishable items. And experts say with the expertise Amazon has developed from selling other items, this adventure should go smoothly.
"They are a very good marketing company and have very good execution and delivery,'' said Ivan Feinseth, director of research at Matrix USA, "so you have to give them the benefit of the doubt.''
Overall, food purchases are still a small slice of the online retail world, accounting for just 1 percent of nearly $200 billion in online purchases last year, according to the latest Shop.org and Forrester Research study.
Some online grocery efforts have thrived. Peapod survived the early dot-com years and has operations in nine states and Washington, D.C. And FreshDirect, which delivers in New York, is another example of success in that arena.
In Silicon Valley, Pleasanton-based Safeway has sold groceries online for five years. Spokesman Brian Dowling declined to comment on Amazon's entry into the market, but confirmed that Safeway delivers to seven markets.
Amazon's advantage may come in its delivery platform, which is the same for its non-perishable groceries as it would be for any of its other products. The company, facing increasing competition, is second only to eBay in online retailing, according to Nielson/NetRatings, and is the largest Web retailer with its own distribution network.
Besides its books and gifts store, Amazon began rolling out new product lines in 2002. It has since added clothes, sports equipment, jewelry and gourmet food. Most recently, it added an emergency-preparedness product store this year.