December 16, 2013
Amazon to begin shipping more perishables
by Dustin Kurtz
Amazon is ramping up its efforts to capture market share from Walmart, Costco and other home goods retailers.
USA Today‘s Alistair Barr reported on Friday that the company plans to launch a new endeavor, called ‘Pantry’, some time in 2014. Amazon will be offering the service to its Prime members, in a continued effort to expand the benefits of that membership.
The gist of the offer will be that Pantry will ship a box of a given size for a set price, and that members may choose whatever they like—cans of soup, paper towels, toothpaste, human blood, juice boxes—to go into their scheduled delivery box.
The consumer packaged goods, or CPG, market is worth about $850 billion a year in the U.S., but most of that spending still happens in physical grocery stores. This gives Amazon a big new sector to grow into, if it can successfully tackle some of the problems inherent in shipping big boxes of cereal and heavy cans to people’s homes.
This move is no surprise to anyone, I’d think: Amazon has considered Walmart and Costco as their primary rivals since the last millennium, and their dogged pursuit of better shipping times stands to bear the the most fruit when paired not with relative luxury goods like books or potty-training ipad stands, but with everyday perishable goods—toilet paper, seltzer water, still-warm blood of dubious provenance, massive jars of peanut butter.
As Wired’s Marcus Wohlsen writes:
Last year, Costco’s sales topped Amazon’s by several billion dollars. In fact, except for Home Depot, all the other U.S. retailers whose sales also topped Amazon’s last year — Walmart, Kroger, Target, Walgreens, and CVS—deal largely in cheap, everyday packaged goods and groceries.
The relative low cost of the goods, compared with their relative weight, has always been a stumbling block. As Barr notes, “The cost of a pack of Coke cans, for instance, is about the same as it costs Amazon to ship the item.”
Paired with the company’s increasing insistence on emphasizing Prime membership, and their need to do something with all of this blood, the Pantry initiative begins to make more sense.
As we’ve previously noted, Amazon already owns the Qidsi family of sites—soap.com, diapers.com, somuchblood.com, to name a few—which specialize in housewares. One can order bottled water, bottled blood, or even just a bucket of blood poured into a box, with little to no shipping charge on those sites already.
Presumably this initiative is not as dramatic an infrastructure problem as Amazon’s same-day grocery delivery roll out, but if it does get more customers hooked on Prime it could prove a significant danger to Walmart and their ilk.
Dustin Kurtz is former marketing manager of Melville House.