Amazon Is Using Local Grocers to Win Delivery Faster | Fast Five Shorts

Two separate but related headlines to close out today.

First, Amazon and Winn Dixie have expanded their grocery delivery partnership to the greater Tampa Bay area.

And second, Amazon also has announced the rollout of new one hour and three hour delivery options covering over 90,000 products in hundreds of US cities, according to the Business Observer.

I don't know if you knew this, Carter, but the Business observer is Florida's newspaper for the C suite.

That's what it says directly on their website.

Well, good to know.

Yeah, I didn't know that.

So when I'm in Florida, I better be reading that one.

The Windset expansion makes delivery available to customers in many new Florida counties and including Tampa, Brandon, Lakeland, Bradenton, Sarasota and surrounding communities, adding to a service that began in Jacksonville and Orlando last September.

Customers can shop more than 15,000 Winn Dixie grocery items on Amazon, including fresh produce, quality meats, private label brands and locally sourced products.

Winn Dixie Rewards members can even link their accounts to Amazon to earn rewards points on eligible purchases redeemable for dollars off future in store purchases.

Then, on the delivery speed side of things, Amazon's new one hour option is also now live in hundreds of cities and towns and three hour delivery is now available in over 2,000 cities.

All right, Carter.

Amazon has quietly been adding regional grocers like Cub and Winn Dixie to extend its grocery reach.

And now it's offering one hour delivery in hundreds of US cities.

Who do you think wins and loses in the long run here as Amazon continues to tighten its grip on the final mile?

You have wins and losers here potentially.

But I think what's really interesting is, is that if you look at the grocery history of Amazon, it hasn't been awesome.

Right.

They've struggled to get grocery, but you know what they're really freaking good at?

They're really good at logistics.

And you know what also these other grocers are good at?

They're good at trust.

Right.

These consumers, these customers trust Winn Dixie.

They trust their local grocery.

They trust Cub, they love their Cub foods, they love their local Winn Dixie.

You know, and so what Amazon's been able to do is they've been able to capitalize on that trust and actually monetize it by putting the logistics layer between the trusted grocer.

Don't mess with that.

But then I'm still gonna get paid.

And this isn't cheap stuff.

We're talking like 1530 delivery setups.

Right?

Right.

The idea that you can now pay for the Amazon, the best logistics in the world to get you those groceries quick.

I think consumers who can afford it are gonna really, really love it.

Now who loses in this?

I don't know.

Right.

Like I, if you look at the groceries, I'd be curious in your take, Chris.

Like, yeah, you know, they're still getting the purchase.

I'm sure Amazon's taking some healthy cut from already slim margins of grocers.

The, the thing is, is that though these, in the today's day and age, these local grocers don't have a single hope in the world to spin up their own delivery network.

Right.

They can't compete with the, with the others and so know to go with Amazon the biggest and the best, like it seems like a smart move.

Yeah, yeah, well, okay, I think, but.

I want your take because I, I want you.

Yeah, there's a lot here.

There's a lot here.

I mean, I think, you know, in it could be argued it's a smart move in, in the short term.

But you know, the other part about Amazon too is Amazon is incredibly good at business.

You know, and I think you have to look at the history here as a judge too.

Like you look at, you know, they bought diapers.com and what they do, they basically like brought that into the fold and kind of, you know, basically shut it down.

They brought Zappos into the fold and now Zappos is a shell of what it used to be.

Right.

And so the same, the same kind of principle, you know, applies here.

Whereas like you get all these regional players onto the platform, it looks like a win win for everyone.

Amazon gets the mark media dollars from having these products on their shelves in a way that, that the regional grocers aren't going to get to the same degree because Amazon's ad network is so much bigger.

Amazon just continues to leverage the scale of its delivery infrastructure.

The regional grocers are going to find it tougher and tougher to compete.

This is going to help them feel like they're competing in the short term.

But at the end of the day their business is probably going to get smaller and smaller and smaller and then the values of those businesses are going to get smaller and smaller and smaller.

So that leaves Amazon a great option.

You know, five to ten years out they can say, do I just let them die off because, you know, I've got a healthy business that I've created in groceries somewhere else, or do I come in and start buying these up?

Do I start buying these up regionally and you know, just because I know what they're going to sell.

I know how much volume I'm going to get from it.

I know what it's going to take to run it, and that's how I get into the grocery business.

So.

So I think it's really fascinating because you're right.

There's.

There's only so many options, like Walmart's kicking their.

Kicking everyone's butts, right?

Carter, you could go with Instacart, which is fine, which Amazon is essentially like Instacart, you know, different version of that.

Or you can set up your own delivery infrastructure, which is the only real way to survive in the long run.

You have to figure out your own picking and packing infrastructure in a way such that you can then very comfortably plug yourself into any of these marketplaces that you want at no detriment to yourself.

Right?

Because then you can keep the first party data, you can keep them on your site.

You can make the decision out of desire to be on Amazon or be on Instacart versus being forced to be in there because your customers are wanting you to.

Wanting to find you there.

So that's the thing for me here is like, I think this is a needle that if you put it in your arm, it's gonna be really hard to get it out.

And I worry about that in the long run.

What do you think, though?

A hundred percent.

If you think about the strategy as described, Amazon five years ago started going top down, buy whole foods in its entirety, right?

For, you know, let's, let's do that, that kind of stuff.

And, and you can almost describe what you're, you're talking about here.

Is this kind of ground up?

You know, it's the, the frog and boiling water a little bit here, right?

Because yes, they got logistics like, what's the next step?

Like, all right, well, why couldn't you just shop Winn Dixie from Amazon.com right?

You know, and all of a sudden now you have all that traffic and you tell Winn Dixie, it's like, hey, managing a site is hard.

You got to bring people to it.

We'll just take care of all.

But we already got your inventory, we're already doing delivery.

And before you know it, Amazon, to your point, just buys the brand, which is a shell of itself, and slaps that brand on the side of an Amazon warehouse and calls it a new Winn Dixie.

Yeah, yeah, because we've already got 20% of your volume going through, you know, Walmart in that region.

And then they solve the trust problem because the average person is like, I love Winn Dixie.

And who knows where that cucumber is actually coming from, right?

Yeah, yeah, yeah.

And, and all that stuff is market available too.

So Amazon's also going to know what's selling in those regions and then can also just position their own products there directly because people are probably on the site looking, you know, at all the options that are available too.

Even if they're potentially still loyal to Winn Dixie over time, that's going to, you know, siphon off some customers too.

Yeah, that's a, that's a great way to think about it, Carter.

It's more of a bottoms up approach here that Amazon's potentially taking.

So, so Net.

Net.

So did, did your mind change on that one?

Do you think that there's some more fear for the.

The reason grocers could lose here in the long run?

I just think like, there's so much competition in terms, like to your point, setting up your own logistics network as a regional grocer, like, what are you really going to do?

Right.

And so, you know, your choice is to partner with Amazon or not to partner with Amazon and just trust that in store sales are going to continue to be what they are.

And, and honestly too, there's still a lot of people in this world who go to the grocery store every week.

Like, you know, grocery delivery is still, though, growing.

It's, it's not 50 that for sure.

Right.

Like, you know, you're talking 10, 15 maybe, right.

If that.

And so there's still a huge market that wants to go to Winn Dixie.

So I guess the argument would be is like, okay, do you do this or do nothing at all?

And I think there are probably two poor ends to each one of those.

Those flight paths.

Yeah, yeah, it's not a position I'd want to be in.

Which is also probably why Aho Deleza's CEO yesterday jumped ship to Dollar General.

For those that are paying close attention to the headlines too, that's probably a big reason because he saw, you know, he sees the wr.

The wall in terms of where does he want to be and where does he want to have his chips placed?