Jassy Still Optimistic About Amazon Grocery

E-commerce giant Amazon continues to be optimistic about its foray into grocery, according to CEO Andy Jassy. He touched on this growth driver during the company’s first-quarter earnings call. 

Amazon's grocery business is segmented into a few different components. Its perishables business encompasses the physical presence of Amazon Fresh. “We've launched our V2 format in physical stores over the last few months, primarily in Chicago and Southern California,” noted Jassy on the call. “We like the early results a lot. They're really meaningfully better in almost every dimension. It's still early, and there's some things to work through, but we like what we're seeing there.”

The company is currently in the process of removing its proprietary Just Walk Out technology from its U.S. Amazon Fresh stores. Going forward, the company will rely on its Dash Carts for seamless checkout. The Dash Cart uses a combination of computer vision algorithms and sensor fusion to help identify items placed in and removed from the cart. When customers are ready to check out, they can skip the checkout line and simply exit the store through the Amazon Dash Cart lane, and a receipt is instantly emailed to them.

Along with skipping the line at checkout, Dash Cart helps consumers locate items with an on-cart screen featuring maps and navigation, and enables them to have personalized shopping experiences, all while tracking their savings and spending in real time. 

Then there is Amazon’s nonperishable grocery business, which continues to grow at a “very rapid rate,” according to Jassy. The nonperishable business includes items like canned goods, pet food, and health and beauty products.  

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For its organic grocery business, Amazon will debut a new, smaller Whole Foods market concept in Manhattan later this year. Called Whole Foods Market Daily Shop, these quick-shop stores will range from 7,000 to 14,000 square feet – about a quarter to half the footprint of the average 40,000-square-foot Whole Foods Market store. These smaller stores are designed for shoppers in urban neighborhoods and will provide an option for grab-and-go meals and snacks and weekly essentials while still offering seasonal produce, meat and seafood, prepared foods, breads, alcohol, and supplements, as well as a handpicked range of local specialties and the private label 365 by Whole Foods Market brand.

The first new Whole Foods Market Daily Shop will open this year on the Upper East Side in Manhattan at 1175 Third Avenue, with additional locations in New York City to follow. Following the New York City launch, Whole Foods Market plans to bring the format to other cities across the country.

In addition, Amazon recently introduced a Prime benefit for grocery. At $9.99 per month for Prime members, the new subscription offers unlimited grocery delivery on orders over $35 from Amazon Fresh, Whole Foods Market, and a variety of local grocery and specialty retailers on Amazon.com. Customers with a registered EBT card can also experience the same grocery subscription benefits without a Prime membership for just $4.99 per month. The subscription is currently available at more than 3,500 cities and towns across the United States.  

“It's a very valuable offering for our Prime members, and it's off to a great start,” said Jassy. “So, in my opinion, we have lots of ways that we can continue to help customers satisfy their grocery needs.”

Meanwhile, Amazon is starting its fiscal 2024 on the right foot with strong Q1 earnings. The company reported $143.3 billion in revenue, up 13% year over year, excluding the impact from foreign exchange rates; $15.3 billion in operating income, up 221% year over year, or $10.5 billion; and $48.8 billion in trailing 12-month free cash flow adjusted for equipment finance leases, up $53.2 billion year over year. 

“We remain focused on driving better experiences for our customers while also delivering efficiency improvements,” observed Jassy. “Our financial results are an encouraging reminder of the progress we're making.”

Seattle-based Amazon is No. 2 on The PG 100, Progressive Grocer’s 2023 list of the top food and consumables retailers in North America. PG also named the company one of its Retailers of the Century.