While Amazon has a few footholds in the grocery warehouse realm, Reuters reported that experts are saying it won’t be enough to rock the brick & mortar market even with the recent moves set in motion to acquire Whole Foods.
"If Amazon wants to become a dominant grocery company in a short period of time, then there would be an investment required, and it would be big," said MWPVL International Inc. President Marc Wulfraat.
The e-commerce giant has some facilities in place through its AmazonFresh and Prime Pantry ventures, but would need more to expand in the competitive grocery market with traditional brick & mortars that have been building their presence for several years.
How much would the company need? About 12 or more additional grocery warehouses, according to the report.
Wulfraat and MWPVL said that Amazon has a little over 3 million-square-feet of U.S. warehousing dedicated to its existing AmazonFresh and Prime Pantry grocery programs, and Whole Foods’ current distribution capabilities adds over 1 million-square-feet of warehouse space for distribution to its markets, with a portion of inventory going from suppliers directly to stores.
Together, it makes a fraction of what giants like Walmart and other grocers have in the distribution tank.
Will Amazon’s next move involve expanding its fresh distribution capabilities? For now, experts said it will likely look to United Natural Foods Inc. (UNFI) to supply Whole Foods with “hard-to-source” products, and further back previous theories that cutting costs in the retailer’s stores in distributing conventional groceries would be another focus.
Deli Market News will report as Amazon’s grocery strategy continues to unfold.