Dive Brief:

• More than half of consumers involved in a recent trial of AmazonFresh grocery delivery said they would very likely use the service again, according to The Packer. Just 17% said they would not likely use the service.
• The test involved 20 consumers enlisted by market research firm Field Agent to buy at least $10 worth of groceries, including fresh and chilled items. It also found that 80% of respondents — who were mostly female and represented an even distribution of age groups — reported their items showed up in very good condition, while 10% said their items arrived in good condition. 
• Respondents said they like AmazonFresh’s ability to save time and grocery trips, but some reported they didn’t like having someone else choose fresh items for them. “I most dislike that you cannot pick your own produce,” a respondent told Field Agent. “Sometimes I want to be able to see what I am buying first.” 

Dive Insight:

Field Agent’s study may have only included 20 shoppers, but the results indicate that AmazonFresh is executing at a high level with its grocery delivery service. That’s a good sign, but does little to address Amazon’s challenges with scale and competition.

After more than a decade of operation, AmazonFresh has expanded to only a handful of metropolitan markets worldwide. The obstacle lies in the economics of grocery delivery — cold storage facilities that house fresh products are expensive to build and last-mile delivery is incredibly inefficient. Even with its massive size and capital, Amazon has been forced to play it conservatively with AmazonFresh.

Competition also is heating up in the markets where AmazonFresh operates, with brick and mortar chains as well as pure play companies like Peapod and FreshDirect challenging the e-commerce giant. Walmart is becoming an increasing threat to Amazon’s grocery ambitions as well as its larger online retail operations. A Field Agent study from last month found shoppers prefer to order their fresh groceries from Walmart over Target and Amazon.

Still, big changes could be on the horizon with Amazon’s acquisition of Whole Foods. Many speculate the online retailer will use Whole Foods’ stores and distribution centers as the cold storage facilities AmazonFresh desperately needs. The company could use AmazonFresh as its platform for store pickup orders, as well, and will likely beef up the service’s selection with Whole Foods’ popular 365 brand and other offerings.

The possibilities are endless, and it has prompted other retailers to ramp up their online grocery efforts while also keeping a close eye on Amazon. The e-commerce company’s grocery delivery efforts have been underwhelming so far, but as retailers know all too well, Amazon has the patience, expertise, resources and execution record to become a real threat in the space.