Amazon, the online retail giant, started selling groceries on its website last week. The line-up consists of over 15,000 non-perishable grocery and gourmet food items, including well-known brands such as Kellogg’s, Pepsi, Campbell’s, and Knorr.
At first glance, it’s difficult to see how Amazon can compete on price once they factor in the cost of delivery and shipping. The grocery business is cutthroat and the industry is known for its razor-thin profit margins. Most consumers shop for the best prices, often travelling to multiple grocery stores and fighting with busy crowds in order to complete their shopping lists.
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That makes a compelling case for doing the bulk of your grocery shopping online. With careful planning – allowing three to five days for delivery – you can restock your pantry with a couple of mouse clicks. Shipping is free on orders of $25 or more, or customers can sign up for Amazon Prime and get free two-day shipping on eligible items, plus one-day shipping for as low as $3.99. Amazon Prime offers a free 30-day trial, after which the annual membership costs $79.
My guess is Amazon will find a way to compete on price for most items, taking a short-term loss until they’ve influenced the grocery shopping habits of millions of consumers. Their product line will expand over time, offering even more choices to consumers.
What I like about buying groceries online
I’m not convinced online grocery shopping will replace traditional grocery stores anytime soon, but the service is appealing for a number of reasons.
Restocking the pantry full of dry goods is not something we do on a whim, which makes the three-to-five day shipping window more palatable. Ordering a bag of flour, a case of apple juice, and a few boxes of pasta and cereal would certainly save me a lot of time and effort.
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I buy most of those items at Costco where I dedicate an entire afternoon toward driving, parking, navigating the warehouse, elbowing through the hordes of mouth-breathers (who stand in the way while drooling over the samples), waiting to check-out, loading up the car, and unpacking the groceries at home. Home delivery sounds quite pleasant.
What I don’t like about buying groceries online
Besides the cost, which at this point looks to be higher online than at the regular box stores, grocery shopping is a ritual that deep down most of us enjoy. We like to touch, feel, and smell what we’re about to buy. We like to compare items side-by-side, see what others are buying, and chat with shoppers in the produce section. We get to know the butcher and the baker, and the cashier who rings through our groceries. We like to check the flyers and shop the sales. Shopping online can take the fun out of the whole experience.
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I’d also feel uneasy if the online service expanded to fresh foods like meat, dairy, and produce. Obviously the shipping window would have to be reduced to same day service for that to work. One such service in Ontario called Grocery Gateway offers customers home delivery for online grocery orders, and includes perishable items. The company has a freshness guarantee which ensures your fresh items arrive with a certain minimum number of days left before expiry.
Final thoughts
Grocery shopping comes down to quality, variety, convenience, and price. If Amazon can add more brands and items to its product line and keep its prices competitive, they’ll have a huge impact on grocery shopping in Canada.
Consumers will ultimately benefit if the online behemoth succeeds in the grocery business and helps drive prices down overall.
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What’s your take: Would you buy groceries online?
