Why Amazon's Fresh Food Delivery Won't Kill Walmart (Yet) | Fast Five Shorts

Speaker A: 00:00:00

While we were on vacation.

Speaker A: 00:00:01

CHRIS Amazon added perishable foods to its same day delivery offering.

Speaker A: 00:00:05

According to Reuters, subscribers to Amazon.com's new Prime service can now get strawberries, milk, meats and frozen dinners on the same day that they order them.

Speaker A: 00:00:14

The new same day delivery service is free for prime members who pay 14.99amonth or $139 annually for orders over $25.

Speaker A: 00:00:24

Shoppers without a Prime membership can pay a $12.99 fee or regardless of order size to use the new service.

Speaker A: 00:00:31

And as of last Wednesday, Amazon shoppers In more than 1,000 US cities were able to obtain same day delivery of perishable food items and the company plans to expand the service to 2,300 cities by the end of the year.

Speaker A: 00:00:44

Chris do you see Amazon Fresh same day delivery as a sizable direct threat to Walmart and Instacart?

Speaker B: 00:00:52

Wow.

Speaker B: 00:00:53

You know, and I, I'm going to take a little bit of a potentially surprising opinion on this one and I'm curious what you see, what you think too, because we haven't talked about this in adv.

Speaker B: 00:01:01

I don't really see it as a threat to either one.

Speaker B: 00:01:03

I don't really see it as a big threat to either one.

Speaker B: 00:01:06

And I say that for a couple of reasons.

Speaker B: 00:01:07

First, and I would give credit to my buddy Tom Furphy of Replenium because he pointed out this week in an article for Grocery Dive, he asked the question do consumers really want to combine their fresh orders with everything else they're getting from Amazon?

Speaker B: 00:01:19

You know, and I think he's right.

Speaker B: 00:01:21

I got to give him credit for that.

Speaker B: 00:01:23

I think the jury is still out on that.

Speaker B: 00:01:24

We actually don't know.

Speaker B: 00:01:26

And second of all, Walmart plus is still a much better value at $98 per year, as I'm sure you'll attest to being the biggest Walmart plus super fan out there.

Speaker B: 00:01:36

And the other point is Walmart also still has a long standing reputation as an actual grocer.

Speaker B: 00:01:42

So I don't see conversion happening, you know, from Walmart either.

Speaker B: 00:01:46

So now, so then, so then that leaves the Instacart and the Doordash, you know, that whole lot.

Speaker B: 00:01:50

And so the difference between Walmart, there's a difference here though, because the difference between the Instacart and the DoorDash marketplaces and Amazon is that they're connected to the actual grocers from which consumers actually want to shop.

Speaker B: 00:02:02

And that already trust Amazon is just, it's just Amazon Grocery doesn't mean anything.

Speaker B: 00:02:07

It has no connotation for freshness, which is a big hurdle to get over, you know, to make this happen.

Speaker B: 00:02:13

So you, Amazon starts to build a reputation in groceries, so what?

Speaker B: 00:02:17

Provide incremental business?

Speaker B: 00:02:19

Yeah, but I think it's more of a threat to like the Gopuff players of the world than it is to like DoorDash, Instacart and Walmart.

Speaker B: 00:02:26

I just think there's more competitive moats at play here than people are probably thinking about.

Speaker B: 00:02:30

Like the other point I make, Dan Borger, Borgo said this on LinkedIn, he's like those trucks you see that Amazon's out delivering with, they're not going to be able to deliver frozen food.

Speaker B: 00:02:40

They're not equipped for that.

Speaker B: 00:02:41

So like this is a whole different set of infrastructure too that Amazon may or may not have the muscle to pull off.

Speaker B: 00:02:46

So I don't, I don't know.

Speaker B: 00:02:48

That's my take though.

Speaker B: 00:02:49

And what do you think though?

Speaker B: 00:02:50

Do you agree with me or disagree?

Speaker B: 00:02:51

Do you think it's, I'm guessing I kind of disagreeing with me based on the looks you're giving me on the video.

Speaker A: 00:02:56

I think the, it's, you know, I think it could be making a dent in the short term, especially based on the data that you shared in the retail daily minute from Jordan Burke's Tomorrow group.

Speaker A: 00:03:04

You know, as it is having some impact in these thousand cities that it's in right now.

Speaker A: 00:03:09

But I think that there's two reasons that this to me is not a long term threat.

Speaker A: 00:03:14

First, as you mentioned, you still have quality and the reliability hurdle to get over from grocery from Amazon.

Speaker A: 00:03:20

And while I think this free delivery for prime members might be a way to like start to get some early orders or to get people to experiment again or to revisit getting grocery delivery with their other items on Amazon.com I still don't know that when they get those items it's going to pay it off.

Speaker A: 00:03:39

And it's still like you mentioned, more expensive than a more reliable player like a Walmart Plus.

Speaker A: 00:03:46

Second, I think you have to think about how consumers are starting to search for things.

Speaker A: 00:03:50

And if you look at organic search behaviors over the last several years, especially when grocery products are involved, E marketers showed that, you know, product search, when grocery is a component of the order is increasing at a much more steady pace at Walmart than it is anywhere else.

Speaker A: 00:04:06

So Amazon may still lead, that might still be the place where people are going to search right now for that.

Speaker A: 00:04:11

You know, I need a phone charger or whatever.

Speaker A: 00:04:14

But I think that it's going to continue to lose share to places like, you know, LLM search engines or to Walmart.

Speaker A: 00:04:21

And that's where things are going to change.

Speaker A: 00:04:24

And I don't see this like long term payoff of Amazon's my go to for everything perishable, everything, you know, essentials product.

Speaker A: 00:04:33

I don't think it's enough to keep that momentum going for Amazon.

Speaker B: 00:04:38

Yeah, no, I, yeah, that, that's, it's really interesting.

Speaker B: 00:04:40

And that, that, that research study that you mentioned with Jordan Burke and Tomorrow Retail too, which I thought was really interesting and really good.

Speaker B: 00:04:46

Yeah, it's, you have to read between the lines on that article a little bit too though, because that was.

Speaker B: 00:04:51

And, and, and I'd love to get Jordan's opinion on this maybe when he sees the post on social media too.

Speaker B: 00:04:55

It seemed like that was more about like the household cleaning products and things like that that people are adding to their orders versus like actual fresh gr.

Speaker B: 00:05:05

So I think they're making.

Speaker B: 00:05:06

That's a, it's, it's a bit of a logic jump to say that that's going to then happen with fresh and frozen foods too, you know, because the beauty of those, those orders is they can sit on your doorstep for a while.

Speaker B: 00:05:18

That can't happen with fresh and frozen food orders.

Speaker A: 00:05:20

Right.

Speaker B: 00:05:20

Like, you know, do you.

Speaker B: 00:05:22

So I think that the thought process here is really tricky in terms of whether this plays out.

Speaker A: 00:05:26

Yes, Celia Van Wickle did a really good test on LinkedIn.

Speaker A: 00:05:30

So Celia has been a longtime follower of the show.

Speaker A: 00:05:34

But Celia did a test order and the stuff didn't show up at the same time.

Speaker A: 00:05:39

It's still coming like she got one of like tomatoes were in a separate delivery, then some frozen things and you know, it's like the, that you can give some space and time for like Amazon needs to figure out the logistics of this potentially.

Speaker A: 00:05:52

But how long is that Runway?

Speaker B: 00:05:54

Like.

Speaker B: 00:05:54

Yeah, yeah, I don't know.

Speaker B: 00:05:56

Yeah, I don't know.

Speaker B: 00:05:57

And are they coming from different trucks too?

Speaker B: 00:05:58

You know, I don't know.

Speaker B: 00:05:59

Difference sounds like it's.