Provide comments/response to this students discussion post:

Amazon's move to online grocery delivery will like eventually give the company a competitive advantage, however initially Amazon will have to alter the market to create conditions that create a market advantage. Currently Amazon's grocer delivery is in the test phase, and currently lists 28 metropolitan areas that it is able to service (listed on the Amazon Prime Now website). This service provides fresh produce, or even prepared meals, that can be ordered and delivered within an hour. This program is intended to create a new product line for Amazon (Wells). Amazon's current prices do appear to be competitive with local grocery prices when comparing their online prices to my local grocery store prices. Amazon is currently only able to provide these service to a very small segment of the population, and the American public has not wholly embraced online grocery shopping. Market research for 2016 has shown that of the $795 billion spent on groceries in 2016, only $33 billion was spent online, for merely 4% of the market (Banjo, S). This lack of consumer spending is likely due to a few different factors. The largest factor is that consumers likely feel more comfortable being able inspect and select the food they purchase personally. I know personally I especially like to inspect and select my own produce and meat items. Additionally, grocery shopping is still fairy convenient, as grocery stores are still extremely prolific in American cities. However, as Amazon and other online grocers continue to carve out additional market share grocery stores will be extremely sensitive to this loss of market share (Castaldo). Most grocers need every little bit of market share they are able to muster to cover their costs. As the loss of this market share forces grocers on the margin to close, Amazon will be even more convenient to some customers who have lost their local grocer, further increasing Amazon market share and forcing more grocers to close. It is likely that closing and re-allocation of market share will have a snowballing effect that hits grocers very hard. Places where Amazon will likely do very well, which will be a large market, is places like restaurants. Restaurants have larger grocery shopping lists, more consistent orders, and are less sensitive to what the groceries look like since consumers do not see the raw materials. This will be a large chunk of the market, which will probably allow online grocers to hold a significant market share. For local grocers to retain their customers loyalty they must be able to compete with Amazon for prices and convenience. American consumers will likely continue to vote with their wallet in stores that are able to provide more comprehensive "one-stop-shop" style where groceries and household goods can be purchased all at once, much like the Wal-Mart superstore model is able to provide.