Our Answer to AmazonFresh

It seems these days Amazon wants a piece of everything. They have been going after grocers for a while, and lately have started going after warehouse clubs, and now they are going after CPG's with their own private label offerings.

Should Indys be worried about AmazonFresh?

My quick answer is, No -- not if they are doing their jobs.

My reason for this is that, if you examine Amazon's moves into tthe grocery space, it's clear that in order for it to succeed, it has to develop a local physical presence, in terms of warehouses, and then develop relationships with people in those markets.

First of all, independent grocers already have that presence. On top of this, they have something that Amazon doesn't -- strong relationships with the communities which they serve. That's something you cannot easily build as an online retailer. Independents know the people they serve. Every successful independent I have ever visited had executives who knew customers by name, knew their families, knew their personal tastes and preferences. Sure, Amazon has software that does this, but there is nothing like having a store manager add a new prepared meal item because a customer asks for it in the store.

Indeed, these are relationships that have been built up over many years, via time spent with customers -- either in the store of during community events supported by the independent. Now, some of the chain stores may view Amazon as a threat, particularly those low-price players that don't have such relationships, but community-based independents have the advantage.

What's more, this local foothold presents an opportunity for independents to fight Amazon at its own game -- with online deliveries that are picked, packed and shipped from the brick and mortar stores, and delivered that same day. In fact, delivered within an hour of the order.

Not only would doing this develop a foothold that Amazon would find hard to break, but because you pick from your stores, it will significantly drive up sales and profits.

Delivering in a short time-frame is key, particularly if you are in or near an urban area with working heads of household who are presed for time.

If it sounds difficult, just check out the cover story of our December issue and see how Yummy.com did it, driving sales of his stores up to $1,000 per square foot by picking online orders from the store shelves and delivering them in as little as an hour from when the orders are submitted.

Yummy.com co-founder and CEO Barnaby Montgomery views the online customer as having two types -- those who want a delivery, and those who want groceries. those who want a delivery are those who have the time and the ability to anticipate their needs ahead of time, schedule a delivery, then wait for the delivery. However, that is not how people shop for groceries in reality, he says. They want something, and if they don't have it in the house, they go and get it. As with a pizza delivery, aside from an occasional party, no one typically orders a day ahead of time for their own dinner.

Yummy.com's model has been so successful that his three stores and single warehouse are running at capacity, and he has to open another store to handle the customer volume -- a pretty good problem to have, I'd say.

Now, tell me this: Do you think Montgomery is worried about Amazon?