Another case of Web-related déjà vu this morning with news from the Guardian that Amazon are launching AmazonFresh, a trial service to deliver fresh food in the Seattle suburbs. Readers with a long memory may recall the froth, excitement and general salivation over the thought of the financial rewards to be had from Web-based, grocery shop-and-deliver schemes during the wild days of the dot-com boom. Names like WebVan, PDQuick and Streamline come to mind – all went bust, losing billions of dollars of investor’s money.
Indeed, my copy of Evan Schwartz’s Webonomics (1997), widely read at the time, lauds Peapod, one of the first online grocery services, based in Chicago. Schwartz’s later book, Digital Darwinism (1999) is more cautionary, warning of problems with the way in which the company bought their stock from supermarket shelves, rather than setting up agreements with wholesalers. To be fair to Peapod, they did manage to evolve and are now part of Dutch food retailing giant Royal Ahold (and recently delivered their 10 millionth order).
All this perhaps offers a warning from history. Delivering fresh kippers is not the same as delivering books. In the UK, online shopping delivery has been relatively successful, but only because the main supermarkets are running the services themselves (and so can benefit from their existing distribution infrastructure and general retailing experience). Peapod survives because of its close tie with an existing food retailer.
Although there is some evidence that Amazon may have done their homework (they are going to be working directly with wholesalers and farmers) it’s quite possible that they may have bitten off more than they can chew with this one. It may be coincidence, but the Guardian notes that the stock market took nearly a 2% bite out of Amazon shares on hearing the news.