Article written by Computer Science Resources
It is estimated that U.S. consumers will buy $21 billion worth of groceries online by 2016. Growing at 9.5 percent annually, Bloomberg Businessweek estimates that figure is 52 percent higher than last year’s groceries sold over the Web. As the broadband Internet access expands, many expect that selling groceries on the Web will expand too. Mostly untouched, this segment of the retail market presents enormous opportunities.
Amazon.com, the online retail behemoth is making a major push for online grocery sales. It is adding refrigerated areas to its distribution warehouses. Known as AmazonFresh, the new concept has been undergoing testing in its home base of Seattle, Washington for last five years. It delivers fresh produce including eggs, strawberries, meat and other perishables. Next expansion expected to take place in San Francisco and Los Angeles. If the concept catches on, it plans to expand into 20 other urban areas by 2014. Amazon will compete with established Kroger, Safeway, Whole Foods, Wal-Mart and Target.
Whether it is sold online or in a brick and motor store, one big drawback is generally the grocery business still a low-margin business activity. That’s why some are only concentrating on high-margin grocery items only at the moment.