As per AllThingsD,
) is about to launch its online grocery delivery service,
AmazonFresh in San Francisco. The service is expected to hit the
market on Dec 10, exactly six months after it first expanded out
of Seattle and into Los Angeles.
Amazon had quietly introduced AmazonFresh in 2007 in a limited
manner near its headquarters in Seattle. The service enables
users to order groceries online and get delivery on the same day
or the next day, thus saving time and effort.
Though Amazon is not very optimistic about generating high
margins from the grocery- delivery service, it expects that this
expansion will help to widen its operational activities
(shopping) to different categories from electronics to clothes to
With a view to make this expansion a success, Amazon has already
started investing in warehouses.
Amazon's expansion plan is likely to pose a threat to other
existing grocery chains like
Whole Foods Market
), as well as other retailers such as
Wal-Mart Stores Inc.
Grocery is one of the most difficult sectors to crack, especially
when it comes to online shopping as is evident from the now
defunct business of Webvan. These endeavors often meet with
failure as the operational cost (cost incurred in maintaining
infrastructural facilities for delivery on time, warehousing
facilities for storage of goods, etc) is exorbitant while margins
are low. Also, since the grocery items are mostly perishable in
nature so it further increases the chances of wastage and hence,
it is not possible to forecast demand too in this sector.
Currently, Amazon has a Zacks Rank #3 (Hold). Better-ranked
stocks in the technology sector include
) with a Zacks Rank # 1 (Strong Buy), and
), both with a Zacks Rank # 2 (Buy).
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