They can never move forward with in store pricing that is marked up 25% to reflect the high labor cost of deliveries. The 25% off coupon scheme doesn't fix it because customers in store see that the price is obviously marked up and the coupon takes it down to "only" pricing on the level of Safeway NorCal.storewanderer wrote: ↑November 16th, 2023, 10:24 pmTheir prices in Amazon Fresh are like, higher than Safeway.... and they hardly have any good specials except on very random items mostly near expiration (like a quasi clearance outlet type of store). Their selection is... very odd. I'd call it poor, but it isn't exactly poor (except for the stores with like half of their items in various categories out of stock, I would call that poor). Amazon Fresh is a total embarrassment and they need to shelve this concept now.
At a minimum they should take their name off the stores because having customers see a physical store with as many problems as this store has is not doing the consumer's image of Amazon any favors. Maybe they can let Nash Finish let them use the Econofoods banner and rebrand these terrible stores to Econofoods.
Amazon is proving that once again grocery delivery is too expensive and labor intensive, and it will remain a niche market for primarily rich customers who are not price sensitive. Nobody has been able to crack the code on the online grocery business despite having over 30 years of failed startups to autopsy.
They have to separate the delivery prices from the store price and squash the omnichannel aspect of this, which of course is the polar opposite of what they're trying to do. But they've spent nearly a billion dollars to rehash the same problem that only worsens every day. The labor cost of grocery delivery is too high and there's still no way to reduce it until robots are a dime a dozen, nor will in store customers tolerate attempts to pass along the expenses to them through prices higher than other grocery stores.
I don't see any viability to making a WinCo clone. WinCo is very shrewd and manages to acquire bargain sites that are massive usually by purchasing instead of leasing, then they drive a high value offering that delivers high perception of savings and very low labor so customers will go out of their way to shop them. They can't break even unless they do at least $100 million per year, per store. I doubt the 44 weak stores Amazon Fresh operates are even delivering a total of $100 million a year of in store shopper revenues. Obviously even with skeleton crews in place the labor as a percentage of sales is probably 5 to 10 times higher than WinCo as their store deleverage due to lack of sales.
Let's say that Amazon was somehow able to acquire WinCo size stores and merchandise and price them accordingly so they suddenly do WinCo sales volume in a comparable low labor model (no service perimeter except basic deli and seafood, bag your own groceries, low frills case pack stocking, and lower SKU count to reduce labor expense). Even if it did $100 million a year like a "slow" WinCo the addition of technology expenses alone would render it a money loser, and adding services like online ordering would now cause the store to turn into a financial bloodbath that burns through incredible amounts of cash. Maybe if it suddenly could do $200 million it could work, but the average Costco delivers $200 million and they already have said they can't afford to do curbside pickup type services under their current labor model without substantial price increases chain wide or conversion to mostly self checkout (like Sam's). And adding SKUs would just make it even less profitable because of the extra labor involved, there is a cost to adding every single SKU to the shelf and that's why low SKU count retailers like Trader Joe's, Aldi, Costco and Sam's are so successful. So exactly how would Amazon who couldn't get people to buy a Coke at a convenience store suddenly find a way to create their own WinCo with a higher SKU count that would have to be twice as successful just to break even if they wanted to offer any services at all related to high labor expense online shopping? It's not feasible.
Amazon has not been a low price leader in anything for years and I do not agree that customers expect anything from them other than convenience, the days of buying a TV through Amazon for hundreds of dollars less than the identical model at Costco have been over for at least a decade.
In many cases Amazon has been the death of local specialty stores as well from their activities back when their prices were still affordable, like for example aquarium supply stores which depended on profitable accessories like food, equipment and chemicals to stay open and offset risky livestock losses. Amazon put the same chemicals, lights, parts etc online at cheaper prices than these retailers could sell at, put them out of business, and now just like Walmart they've raised the online price higher than the closed B&M specialist sold those items for. There is nothing cheap about Amazon.
