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The Amazon-Monoprix Deal Comes with Limitations

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Apr. 5 2018, Updated 7:33 a.m. ET

What the Amazon-Monoprix deal entails

Amazon (AMZN) recently struck a grocery retail deal with French retail chain Monoprix, a subsidiary of Groupe Casino. The deal is said to involve Monoprix supplying inventories while Amazon takes care of delivery through Prime Now, the express delivery service it offers as part of its Prime membership program. Prime Now orders are delivered free of charge to Prime subscribers within two hours, while faster delivery—such as within one hour—carries an extra fee.

Amazon’s partnership with Monoprix further highlights its ambition of expanding in the food retail space. But the Monoprix deal is limited geographically. Initially, the Amazon-Monoprix express grocery delivery service will be available only in Paris and its suburbs.

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Monoprix operates in more than 250 cities

Monoprix operates nearly 800 stores in more than 250 cities. Like Whole Foods, the organic grocer Amazon acquired last year for $13.7 billion, Monoprix is best known for its focus on fresh products of high quality.

Amazon continues to put pressure on legacy retailers

Amazon’s deal with Monoprix has created a fresh headache for traditional retailers such as Walmart (WMT) and reminded online retailers such as Alibaba (BABA) that a big battle is brewing for control of consumers’ food budgets.

In the US market, Walmart, Kroger (KR), and Costco (COST) are struggling to resist Amazon’s foray into food retail after the e-commerce giant bolstered its competition in the space by acquiring Whole Foods. Kroger has explored a commercial alliance with Alibaba as part of its response to the Amazon disruption, Reuters reported in January.

In 2017, Amazon made 150 million Great British pounds in grocery sales in the United Kingdom and 200 million euros in grocery sales in Germany, according to One Click Retail.

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