Sat, Sep 01, 2018 - Page 10 News List

Amazon eyes Mexican grocery delivery market dominated by established firms

Reuters, MEXICO CITY

Amazon.com Inc is to begin selling food and drinks online in Mexico, including snacks, sweets and wines, it said on Thursday, a move that could intensify its competition with Walmart de Mexico to claim shoppers in a nascent e-commerce market.

Online shopping represents a fraction of total retail sales in Mexico, but has grown swiftly, putting Amazon and its rivals in a race to ramp up investments in logistics, technology and product offerings.

Amazon views food and drink sales as key to growth, eyeing routine purchases to stock pantries as a way to generate other types of sales, but has yet to dominate the category.

The new items on its Mexico Web site, which it launched in 2015, span coffees, teas, liquors, wines and beers, as well as cooking ingredients, non-perishable snacks and sweets.

“We’re committed to offering our clients as many products as we can,” Amazon Mexico senior product manager Fernando Ramirez said in a statement.

The launch shows Amazon’s intent to claim more of Mexicans’ wallets, said Gene Munster, research head at Loup Ventures.

“Non-perishables are the first step to capturing food spending, and likely indicate Amazon’s ambitions to increase its offering related to fresh food,” he said.

In the US, Amazon moved into online grocery sales through the US$13.7 billion purchase of Whole Foods Market last year. It offers two-hour deliveries and lets shoppers pick up Amazon products from Whole Foods stores.

Walmart aims to deliver groceries to more than 40 percent of US households by year’s end.

The company plans to accelerate its online grocery business in Mexico as well, Walmart International chief executive Judith McKenna said earlier this year.

Soriana, La Comer and Chedraui are among Mexican grocers that also offer delivery services, along with online marketplace MercadoLibre.

Walmart’s Mexico unit, Walmex, is counting on its 2,390 stores to help execute speedy deliveries.

Amazon might struggle to match the selection of traditional stores, said Jose Acosta, a former Walmex executive who is now CEO of digital payments application Pagamobil.

“Brick-and-mortar players have done a very good job of defining a very wide catalog and that’s not something you develop so fast,” he said.

Small warehouses stocked with snacks and drinks will be crucial for Amazon to deliver fast, said Alfredo Garcia, business development head at Mexican e-commerce delivery service Skydrop.

Convenience is also important.

“If you have a party ... what a drag if you go to Amazon to buy beer and potato chips, but you have to use another application to buy meat and tomatoes,” Garcia said.

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