How Amazon Plans to Change Food Retailing Forever

Amazon’s advancement into the food retailing world is going to change the game forever. Or, at least that’s the plan anyway. The takeover of Whole Foods is just another instance of how Amazon is becoming a monster corporation with its feet set firmly into every business. Now, Amazon has found a new target in Blue Apron as it will be launching its own meal kits.

Amazon (NYSE:AMZN)

Blue Apron Needs to Beware!

 

Blue Apron recently launched its IPO, making it one of the most promising food retailing companies in the business. However, on July 6, The Times reported that Amazon has already started preparing for its next big announcement. The company filed a trademark for the phrase “We do the prep. You be the chef.” This trademark is related to meal kits, which is the obvious threat to Blue Apron, selling prepared meal kits. The industry has picked up recently, with ready-to-assemble meals becoming very popular among busy shoppers. The service provides fresh meals that can be assembled with ease.

But Why the Food Retailing Market?

 

The meal-kit market isn’t mature. However, many shoppers are now moving to fresh meal options. They want less processed food and Amazon’s foray into the market may not happen as soon as expected. However, it is likely that the company won’t be running after volumes too. Amazon may prefer to offer a wider range of services to its young subscribers. The latest acquisition of Whole Foods and the trademark application for ‘prepared meal kit’ slogan signifies Amazon’s next plan.

Amazon is already selling prepared meal kits of other companies on its platform. Tyson Tastemakers and even Martha Stewart’s meal kits are already being offered on Amazon Grocery. Its subsidiary, Amazon Technologies Inc. is handling the new business. Note that Blue Apron’s stocks have already dipped after the IPO. Additionally, HelloFresh, a German competitor is also planning to launch an IPO soon.

High Entry Barriers

 

There are high entry barriers in the food retailing market. Blue Apron suggested that it is spending $94 to acquire a customer. Amazon has deep pockets to manage this kind of expenses. However, it may capitalize on its existing Prime membership to launch this new service. Moreover, Amazon has a vast and highly efficient supply chain that can easily manage a new service like this with ease. Industry experts suggest ‘what’s good for Amazon is bad for everyone else’.

Blue Apron and other meal-kit startups could be haunted by Amazon’s new offerings now. Other companies like Campbell Soup Co., Conagra Brands Inc., Unilever NV, and Hershey Co. are few other companies trying to move into the meal-kits business. However, it is likely that the biggest disruption will come through Amazon.

 

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