Henry Watson ’25
The future of Amazon Fresh looks precarious, as its parent company evaluates the economics of the venture. And while the company may have halted the expansion of the brand, the company’s quarterly losses related to the stores due to the costs of property equipment and operating leases are still growing (SuperMarket News).
The city of Los Angeles has been home to many American technological achievements. Los Angeles is where the first U.S. satellite was launched, the first freeway was built and the first American film was made. In the minds of Amazon leadership, that made it the perfect location for what they believed would be another great American achievement–the first cashier-less supermarket. However, the economics of the idea have now been discovered to be unprofitable–and the company should scrap the venture for more futuristic ventures.
Amazon originally sought to disrupt what they saw as a traditional, stagnant industry by introducing grocery stores that would see consumers avoid the checkout line by registering a bank account that would charge them automatically once they left the store–it would be seamless. This concept was put to the test on Sep. 17, 2020 when the first ‘Amazon Fresh’ store debuted in the Woodland Hills neighborhood of Los Angeles.
Over three years later, Amazon’s plans–past its Woodlands prototype–have stalled. Just right here in Westport, the construction on the ‘Amazon Fresh’ store that had taken the place of Barnes & Nobles has stopped since the summer of 2022. This phenomenon–of Amazon Fresh stores beginning construction but suddenly stopping–is far from rare in both Connecticut and the United States.
The reason behind this sudden slowdown is simple–Amazon has already announced to investors its future lies more with its Amazon Web Services (AWS) division and cloud computing rather than grocery stores. Furthermore, the ‘Amazon Fresh’ idea was pioneered in 2007–before applications like Apple Pay allowed consumers to scan their phones for a few seconds to pay for an item.
A solution to this problem is simple–and obvious. Amazon doesn’t have to abandon the grocery store business, as it already has one–Whole Foods. It was certainly right to invest into revitalizing the chain since they purchased it in 2017; they expanded its presence whilst integrating the stores with the rest of the company. It made the brand–in the eyes of the public–a physical entity rather than just being an e-commerce site.
That is why instead of disrupting its own chain, Amazon should scrap the ‘Fresh’ venture in its entirety. Some stores have already shut their doors but the company insists these are temporary measures. They do not have to be. Allocating the money towards its far more future-oriented AWS division would be wiser–there is far greater demand for those capabilities than grocery chains. More importantly for Amazon, there are also greater profits to be reaped.