Online shopping for groceries has been around for quite some time now. Amazon.com, known worldwide for selling books online previously acquired an online grocery business which is now ready for expansion. Webvan, the online grocery set-up Amazon acquired had been closed for twelve years and has been revived as AmazonFresh.
AmazonFresh has been delivering goods in the Seattle community since it started in 2007. With the success it has earned in catering to highly populated areas in Seattle, AmazonFresh is now ready to move forward and expand with Los Angeles as its next base of operation.
Forging the relics
Webvan’s operational failures proved fatal for the company since it only stood its ground for a short time. Amazon sought to improve on Webvan operations since it only lasted three years in the business. Former Webvan officials forming Amazon’s recent executive line up have been contemplating management and operational failures of the online grocery service in order for it to function better the second time around.
According to Tom Furphy, one of the great minds that initiated the AmazonFresh start-up, there’s some Webvan DNA incorporated in the creation of the AmazonFresh program. For him, this kind of approach is the proper way to re-build the former online grocery store. He believes that this is helpful in determining the key factors that would make it more successful and perform better.
A double-edged sword
Market analysts have been witness to the ups and downs of the online grocery business. Even though there’s a couple of online grocery providers engaged in intense competition, it’s not all high risk and cutthroat because the industry promises quite a few perks.
The speculation is that Amazon is set to gain a lot in the grocery industry since the book retail business generated more than $500 billion in sales for 2012. However, despite the huge opportunities that the grocery business promises, some risks still exists. One of the most important risks is that selling groceries is a low-margin business. One of the musts in the proper allocation of expenses is to avoid blowing up the capital through useless propaganda and other marketing plans.
Lessons learned in business expansion
One of the main reasons why Webvan took a huge toll that eventually lead to its demise was the immediate and quite drastic expansion it went through. Krishna Hedge, VP of deployment and systems engineering in Webvan witnessed the huge expansion in Atlanta while its San Franciso operations were still unstable. Hedge gave some recommendations in order to slow down the expansion but Mark Zaleski, president of operations ignored Hedge’s opinion and insisted that Webvan should maintain its current phase.
Learning from the experience of Webvan, AmazonFresh took its time to expand. It waited two years before it decided to take on another territory. On Monday, AmazonFresh trucks rolled out in the streets of selected zip codes on Los Angeles for the first time. Hoping that all should go well, AmazonFresh’s next target is the San Francisco Bay area by the year 2014.
Photo Credit: Amazon Fresh
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