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Less than two weeks ago, Amazon told investors that it planned to press pause on Amazon Fresh grocery store expansions and shutter an undisclosed number of existing Fresh and Amazon Go stores while it rejiggered its grocery business. But Amazon CEO Andy Jassy says that anyone thinking the e-commerce company is getting out of the grocery business is wrong.
Jassy told the Financial Times that although Amazon’s progress on these stores had suffered from obstacles created by the pandemic, the company was already at work “experimenting with selection, checkout formats, assortment, price points,” and it is working to find a formula that works.
In an earnings call earlier this month, Amazon said it took a $720M impairment charge at the end of last year due to costs related to exiting leases and closing locations of its Fresh grocery stores and convenience store format Amazon Go.
But Jassy emphasized that recent setbacks don’t mean that Amazon is backing away from the grocery business.
“We’re just still in the early stages,” Jassy said. “We’re hopeful that in 2023, we have a format that we want to go big on, on the physical side.”
Amazon entered the grocery business in a big way in 2017 when it bought Whole Foods for more than $13B. Since then, however, it has failed to replicate its e-commerce dominance in the grocery sector.
Groceries haven't been a huge money generator for Amazon. Revenue for its physical stores has grown 10% since the Whole Foods acquisition five years ago, according to FT, making up 3.4% of the company’s overall business.
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