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Amazon's business planning expands into the grocery business

For the last few years the online retail giant Amazon has been testing out whether it can make a profit by getting into the grocery business. There business planning has been slow and methodical by staying in one city in the northwest part of the United States to see how well the concept will work. Now, it seems they are finally ready to expand beyond one city with a goal of providing an online grocery service to several cities in 2014.

The service would be similar to that which FreshDirect already provides in New Jersey. Retail giant Wal-Mart is also doing some testing in certain markets to see whether it should get into the online grocery business. There are a lot of grocery items that are currently available for purchase on sites such as Amazon and Wal-Mart. What the companies are talking about here are perishable groceries such as fresh fruit and meats.

In its test city of Seattle, Amazon has its own fleet of trucks that have been doing fresh grocery deliveries for about five years now. Part of Amazon's business model for this service is that if people are buying fresh groceries, they may also buy other items as well. This would practically guarantee that Amazon would make a profit from this venture.

However, there is a possibility that there could be fallout for other businesses if Amazon's business planning succeeds as it hopes. Currently, services such as UPS and FedEx handle the majority of the deliveries for Amazon in New Jersey and elsewhere. If the company is using its own trucks and delivering itself, it may no longer have use for those delivery services. Realistically, there are still a lot of variables to consider, but having a solid plan and the patience to carry it out is a pretty good start.

Source: Yahoo! News, "Amazon plans big expansion of online grocery business: sources," Alistair Barr, June 10, 2013

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