Amazon didn't see immediate success
There's plenty of money for the taking for the company that successfully figures out how to disrupt the food system. The global food industry is a lucrative market with more than $7 trillion on the line, according to William Rosenzweig, dean and executive director of The Food Business School at The Culinary Institute of America. Global food retail sales alone account for $4 trillion.
Amazon is simply making what is an obvious strategic move. "They have been very vocal," says Darren Seifer, food & beverage industry analyst for The NPD Group. "They've said publicly that for them to hit their growth target, they feel the best way to do it is to get into food and beverage. It's a huge part of consumer spending every single year." According to a 2016 Pew Charitable Trusts analysis, food accounts for 10% of a family's income, the second-largest expenditure after housing.
It all started In 2007 with the Seattle launch of AmazonFresh, where the company delivered groceries to customers' homes for same-day and next-day delivery. From the get-go, its prospects have been mixed. What began with predictions that AmazonFresh would quickly take over online grocery shopping turned into slow growth. AmazonFresh didn't expand to other cities until 2013 and, when it did, that came with a $299 annual membership fee, generating plenty of skepticism that the program could ever take off at such a high price point.
But Amazon wasn't deterred by those early hiccups, and the past couple of years have brought a flurry of food-related activity. In late 2015, Amazon started offering restaurant delivery through Prime Now, and then expanded it to more than 20 cities. Last year, it rolled out a private food label called Wickedly Prime hawking everything from Amazon-branded popcorn to tortilla chips. It also partnered with Tyson Foods and Martha & Marley Spoon to deliver their home-cooked meal kits. While Martha & Marley Spoon uses the partnership as a supplement to its regular subscription service, Tyson's meal kits are available exclusively through AmazonFresh. In a big push forward, the retailer dropped the AmazonFresh fee to $14.99 per month for Prime members last fall, which Recode noted proves that "Amazon is indeed very serious about this business."