AmazonFresh

Phillip Duffy, Nathan Fisher, Brett Huey, Hillary Joiner

http://www.youtube.com/watch?v=mwLjK7JNeFk

Background and General Environment

U.S. Internet Usage

What’s Next?

• Amazon has been at the forefront of internet innovation since its conception in 1995.

• Now Amazon is venturing into our next frontier: AmazonFresh.

AmazonFresh

• AmazonFresh is a grocery delivery service that allows our customers to conveniently order their groceries online using a computer or a smartphone.

• We initially offered our service to the residents of Seattle in a beta-test in 2007.

• On June 10, 2013, AmazonFresh expanded to Los Angeles.

Operating Environment

• This industry has been around since the dot-com bubble, but died when the bubble burst.

• AmazonFresh is in the midst of reviving this dead industry.

• Imagine our world in the future. It seems inevitable that brick-and-mortar grocery stores will be a thing of the past.

Customers• AmazonFresh requires that a customer have

internet access.

• Based on our research, the highest percentage of the U.S. population with internet access are college graduates between the ages of 25-40.

• We also see a market for elderly. People age 55 and older are increasing their connectivity.

Suppliers

• AmazonFresh offers products from all areas of a traditional grocery store.

• We have 18,000 items for purchase. Including household name brands, as well as farm-to-store specialty products.

• We buy our goods directly from manufacturer.

Challenges

Challenge #1 – Lack of Tangibility

• The grocery store is a physical experience.

• The grocery store is a social experience.

• These experiences are difficult to replicate online.

Challenge #2 – Convenience & Speed

• The last minute shopper

• Time constraint for delivery

• Competitors using Click & Connect

Challenge #3 – Profitability

• Razor thin margins on grocery items

• Industry giants driving down already low prices

• Will users be willing to pay a membership fee?

• Can we profit from groceries alone? And how large must orders be? Some shoppers go 2-3 times per week.

Strategic Analyses

Porter’s Five Forces

Industry Competit

ors

Potential

Entrants

Buyers

Substitutes

Suppliers

SWOTStrengths-Experienced decision makers-Kiva Systems robots-Solid Triple Bottom Line

Weaknesses-Lacks physical experience-Lacks social experience-Last minute shopper

Opportunities-Delivery density-Membership fees-Social media

Threats-Slow expansion-Low profit margins-Substitutes

Alternative Solutions

SolutionsWe have three different solutions to three different problems in order to push the success of AmazonFresh forward.

•AmazonFresh Farmers Market

•AmazonFresh Stow and Go

•AmazonFresh Neighborhood Association

AmazonFresh Farmers Market

• Partner with American Express to create the AmazonFresh Farmers Market, much like the American Express “Small Business Saturday.”• Addresses problems facing the perception of freshness and physical and social events that are associated with brick-and-mortar stores.• Focus on neighborhood central points that are easy for customers to get to.• Helps sell the membership fee requirement to unsure potential customers.

AmazonFresh Farmers Market• Pros• Products are already

centrally located so moving them to the area is quick and easy.• The locations (Santa

Monica Pier and Seattle Waterfront) are popular destinations for customers and potential customers.• Encourages social and

physical interaction with neighbors and individuals that are utilizing AmazonFresh creating a sense of community.

• Cons• Foot traffic is not only

constant by locals but visitors are present as well.• Identifying AmazonFresh

Customers- there must be an expensive way to ensure that they are treated and thanked for being members.• Mother Nature can easily

call off the entire event-requiring relicensing to utilize the area and event planning.

AmazonFresh Stow & Go

• Partner with our Kiva Systems Robots to address delivery time issues by building efficient and customer friendly store-front kiosks. • Addresses problems with inconvenient AmazonFresh delivery times• Environmentally friendly and cost conscious.

AmazonFresh Stow & Go• Pros• Many customers find that

AmazonFresh delivery times can be inconvenient for their area.• Orders can be fulfilled the

night before and placed at the kiosk for pick up in a convenient neighborhood area.• Cut cost of spending on

gas with delivery trucks (emissions) and saves money by not requiring a driver.

• Cons• Property Cost: Although we

utilize a space the size of a delivery truck, the property cost could be astronomical (areas served).• Last Minute Shopper: This

solution still does not address the last minute shopper who ultimately might need a product.• Technology: While store front

kiosk in Asia are popular, we must address kinks that may potentially arise in the system.

AmazonFresh Neighborhood Association

• AmazonFresh Neighborhood Association addresses the $299.00 price tag behind AmazonFresh Services.• Utilizes social media to show the cost benefits of becoming a member of AmazonFresh.

AmazonFresh Neighborhood Association• Pros• Named for bringing people

together through social media to address the cost of AmazonFresh.• Provides a membership to

the premium services provided by AmazonPrime.• Attracts new and potential

customers by breaking down the cost to $25.00 a month.

• Cons• Unsatisfied customers

might not find value in the service that we offer against the cost• Can be seen as trying to

cut down a local business with the identification of Amazon.

Our Recommendation:AmazonFresh Farmers Market

Do you agree? What are your thoughts, suggestions, and

questions?