Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

Grocery Wars

Amazon Imitates Walmart

Amazon (NASDAQ: AMZN) has found itself in the rather interesting position of playing catch up to Walmart (NYSE: WMT).

Walmart plans to offer free pickup of online grocery orders at 600 stores by the end of October, CBS reported. This includes three drive-in grocery pickups in Minnesota that look a lot like a McDonald’s Drive Thru. Customers will order online, drive in and pick up the orders using click and pull technology.

Walmart is certainly doing something right here because Amazon is building a secretive drive-up grocery store in Seattle, Geekwire reported. The drive-up looks a great deal like the ones Walmart already has in operation in Minnesota.

Customers in Minnesota can choose from up to 30,000 items offered through the grocery pickup service, The Minneapolis Star-Tribune reported. Some of the products offered include meat and produce.

Walmart Drive Up in Minnesota, courtesy Star Tribune
Walmart Drive Up in Minnesota, courtesy Star Tribune.

One has to wonder if Amazon will be able to compete with Walmart in the grocery pickup business. Walmart operated 5,229 stores in the United States alone and Amazon has just one that is not even open yet. Each of those locations is a potential pickup point for items ordered through and which Walmart just bought.

How Kroger also threatens Amazon

Nor is it just Walmart that Amazon has to worry about the grocery giant Kroger (NYSE: KR) has been operating its ClickList home delivery program for some time. Kroger is a major threat to Amazon because it operates 2,781 supermarkets, 39 distribution centers and 785 convenience stores in 36 US states.

Like Walmart, Kroger can offer customers many products Amazon cannot. These include meals and entrees and cooked in its stores and prescriptions from its 2,231 pharmacies. Kroger also sells many of the hard goods that Amazon offers including jewelry, hardware, kitchen utensils, dishes and even shoes.

A major opportunity for Kroger is fresh cooked food and meals including pizza. One possibility would be to adapt the robotic pizza cooking technology Zume is developing and add it to Kroger stores.

The 1,387 supermarket fuel centers and 784 convenience stores that Kroger operates would be ideal pickup points for items ordered through ClickList. Amazon has no infrastructure like that.

Geek Wire claims this is an Amazon drive up under construction in Seattle.
Geek Wire claims this is an Amazon drive up under construction in Seattle.

The Pickup Wars

The stakes in the pickup wars are higher than many people think because the online pickup can easily be integrated with delivery services provided by companies like Uber and Lyft. Walmart is already experimenting with such delivery services in Miami, Denver and Phoenix and working with both Lyft and Uber.

It looks as if Amazon is actually behind two other major retailers in the pickup wars. One wonders if it will ever be able to match the existing brick and mortar infrastructure that Kroger and Walmart already possess.

Perhaps Amazon should forget operating its own stores and form a partnership with a brick and mortar retailer with a large footprint such as Kroger or Walgreen Boots Alliance (NASDAQ: WBA). Walgreen alone owns 12,755 retail stores in nine countries and it is about to buy a major competitor; Rite Aid (NYSE: RAD) which operates 4,572 stores in the United States.

Maybe Amazon should concentrate on what it does best – direct online sales – and leave pickup to the experts. The experts being Walmart and Kroger.