Amazon Needs Warehouses to Reshape Retail Grocery Landscape
SEATTLE, WA - As the retail industry smooths out from the market shakeup that was Amazon’s announcement of Whole Foods accepting a $13.7 billion acquisition bid, Reuters recently reported that the e-commerce giant turned brick & mortar would have many more steps to take before becoming a major grocery presence.
Specifically, experts said Amazon’s warehouse space for fresh distribution is not where it needs to be to compete with other major retailers that have been building their U.S. presence in the market over the last 10+ years.
"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. He explained that Whole Foods’ current distribution capabilities, over 1 million-square-feet of warehouse space with a portion of inventory going from suppliers directly to stores, aren't enough to compete.
How much would the company need? About 12 or more additional grocery warehouses, according to the report.
MWPVL noted that Amazon has a little over 3 million-square-feet of U.S. warehousing dedicated to its existing AmazonFresh and Prime Pantry grocery programs, a fraction of long-standing brick & mortars like Walmart.
For now, experts said Amazon will likely look to United Natural Foods Inc. (UNFI) to supply Whole Foods with “hard-to-source” products, while reaffirming previous theories of cost cuts in the retailer’s stores.
Will Amazon’s next move involve expanding its fresh distribution capabilities? AndNowUKnow will continue to report on this and other developing industry news.