Germany’s well established discount retailers duch as Lidl and Aldi has mean that low food prices are easily accessible to consumers.
This could be a contributing reason to the fact that home delivery has failed to be a profitable business model in the country.
This move is not Amazon’s first into the food market, it has transactions in place across the US selling groceries however it has centered around the purchase of household items and ambient groceries, delivered in bulk.
Amazon also already offers a limited service called Amazon Fresh in Seattle. The service delivers groceries ‘pre-dawn’ (before 6am), as well as doorstep delivery (delivery of groceries in temperature controlled bags to customers doorsteps in three hour windows throughout the day.)
The new German service will ship products to customers overnight using its Prime and Overnight Shipping service, including meat and dairy and fish.
Online grocery retail is worlds apart from non-food retail, in grocery, retailers have to ship bulk low margin perishables, whereas in the non-food market, retailers usually only have to move a couple of more robust, high margin items in order to profit.
The real cost of having goods picked and delivered is closer to EUR10 (US$12.60) than the GBP3 (US$4.55) that UK chains like Ocado charge. Retailers will continue struggling in this sphere until they figure out a way to turn this around to their advantage.
It will be interesting to keep an eye on Amazons latest move into the grocery market, as it enters a highly competitive, price-orientated German market.