24 May

Will This Jet Land on Amazon’s Head?


Jet.com keen to disrupt Amazon in food market

The competition between Amazon (AMZN) and Walmart (WMT) is rapidly escalating, and the stage is set for a major duel in the food market.

Jet.com, the e-commerce operator that Walmart acquired last year for $3.3 billion, is making moves that appear designed to frustrate Amazon in the online food business, a potentially lucrative online retail sector.

Will This Jet Land on Amazon’s Head?

Amazon is preparing to take on Walmart, Kroger (KR), and Whole Foods Market (WFM) in the $800.0 billion US (SPY) grocery market, but Jet won’t allow it an easy ride.

Story versus AmazonFresh Pickup

Jet recently opened a temporary concept grocery store in New York called Story in a move that seems aimed at challenging Amazon’s grocery-oriented initiatives such as Amazon Go and AmazonFresh Pickup, a drive-in grocery concept store opening in Seattle.

Experience versus store network

Amazon is relying on its deep pockets and experience in e-commerce to vie for the billions of dollars that consumers spend on food. However, Walmart sees its widespread retail location footprint as an advantage in the grocery duel with Amazon. Walmart has more than 4,600 retail locations in the United States alone, and Amazon is only just beginning to open physical stores to sell food and books.

Why physical stores are important

The reason physical stores matter in the grocery business is that few shoppers have embraced the idea of buying food on the Internet. Wells Fargo estimates that only ~1.0%–2.0% of grocery spending has moved online.

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