Amazon wants to rule the aisles
In early 2017, a memo circulated inside Amazon that imagined an ambitious new grocery chain. The document was written like a news release, a common practice for ideas being weighed inside the company, with the title “Grocery Shopping for Everyone.”
The new stores, the document envisioned, would have robust sections for produce, fresh food and prepared meals. Non-perishable products, like paper towels or canned beans, would be stored on a separate floor, away from customers. Shoppers could order those items with an app, and while they shopped for fresh food, the other products would be brought down in time for check out. There would also be an area to pick up groceries ordered online and to manage packages for delivery drivers.
The faux news release, which has not previously been reported, cited a fictional grocery expert named Hal Apenyo, as in the chili pepper, declaring success in just six months. “The conversion from offline grocery shopping to mixed format shopping has been massive,” the character was quoted as saying.
A few months later, in June 2017, Amazon barged into the grocery business in a different way, by announcing a blockbuster deal to buy Whole Foods for $13.4 billion. The purchase catapulted Amazon near the top of the $700 billion grocery industry, and sank stocks of traditional grocers on fears that they would be outpositioned into oblivion. The memo and other big grocery proposals stopped circulating inside Amazon, as Whole Foods demanded everyone’s attention.
But two years later, instead of Whole Foods being the answer to Amazon’s grocery ambitions, it seems to have only whetted executives’ appetites.
The marriage has made clear the difficulties of selling fresh food inexpensively, either in a physical store or through delivery. Bananas are not the same as books.
But the combination has also shown glimmers of success, particularly in delivery. And that has provided some fuel to Amazon executives pushing to add another food-selling option – one built from the ground up that would change how people buy groceries.
The company is now quietly exploring an ambitious new chain, probably separate from Whole Foods, that is not far removed from the one outlined in the old memo. It would be built for in-store shopping as well as pickup and delivery. As the discussions heated up this year, employees passed around a slightly updated version of the memo.
The details of Amazon’s challenges and ambitions in the grocery business are based on interviews with more than 15 people who have worked at or with the company. Most spoke on the condition of anonymity because they have nondisclosure agreements or were not authorized to speak publicly.