Look to Spain to See Amazon's U.S. Grocery Plans
SEATTLE — With Amazon's acquisition of Whole Foods Market complete, industry watchers should turn their eyes overseas to get a sneak peek at what the ecommerce giant may have planned for the U.S. grocery channel.
In late September, Amazon made its first deal for Prime Now to deliver fresh food from a traditional neighborhood market in Spain. The alliance with dozens of small vendors in Madrid has drawn visits from top Amazon executives, and traditional neighborhood market managers from major cities including London, Paris, and Berlin.
Prime Now is already available in 30 U.S. cities, working with local grocers to quickly deliver fresh meat, seafood and produce, Ana Rigby, a spokeswoman at Amazon's headquarters in Seattle, said in an email to Progressive Grocer, a Convenience Store News sister publication.
By entering Spain, Rigby added, "Globally we offer local stores the opportunity to leverage our expertise with last-mile delivery to provide a new convenience to their customers."
But many sense that Amazon also sees Spain as a testing ground for its future grocery plans in the United States. In part, it's an effort by Amazon and the Madrid market itself to perfect the delivery of fresh fish, meat, fruit and vegetables to consumers at nearly breakneck speed, they said.
"The success of the project is that we are the first (traditional) market in the world that can send fresh products to clients in one or two hours," said Guillermo del Campo, a lawyer and longtime manager of Mercado de la Paz in Madrid.
According to grocery analyst Bill Bishop, other Amazon goals also are in play.
"It's all geared to help them reach ultimately a critical mass of penetration into households that will support their more routine direct delivery to those households. If you're delivering to most houses, the delivery function becomes very efficient," said Bishop, a co-founder of the Barrington, Ill.-based Brick Meets Click consultancy.
When entering Spain's grocery sector, Amazon also made a deal with the large supermarket chain DIA, which had revenues of $11.6 billion in 2016 from 7,300 stores in Spain and four other nations.
The alliance focused on DIA's newer stores branded as La Plaza de Dia, which aim to replicate the old idea of shopping for your groceries on the town square.
Bishop said it seems Amazon in Madrid "has intentionally put together several levels of food quality, combined them, bundled them, so that the consumer has a choice in interacting with them."
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