Getting groceries from Amazon

This piece from Reuters links Amazon’s entry into the grocery market with Ocado’s imminent share offering.  But I’m unconvinced that Amazon and Ocado are likely to be close competitors.  Ocado’s strengths are in logistics and the supply chain and on the whole are based on achieving economies of scale, hence their ambitious targets for growth and their focus on getting people to do a big weekly shop with Ocado.  One of Amazon’s strengths is its ability to make its payment and fulfilment mechanism available to a range of small sellers (for instance second-hand bookshops), and it’s this strength that will help Amazon in the food market, as they can connect buyers with a whole range of small and specialised food shops.  So Amazon could become the channel of choice for ordering particular delicacies now and again, but I’d be surprised if they go for the conventional large supermarket business.


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