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This post is a response to something I just read on Techcrunch, and wanted to write about. Sometimes, I dont understand the rational behind some of the decisions by the people incharge of some companies. But, thats because I probably dont have access to past data and statistics and the in-depth research that they have.

Now, Amazon beleives it can make the “fresh-produce home-delivery” model work this time around with “Amazon Fresh” - almost 6 years after Webvan failed miserably with the same model… even after Webvan went IPO and rapidly expanded into 26 cities all over USA. The business model is exactly the same, with absolutely no hint of a Web2.0 angle - because there probably isn’t any. For those of you who were sleeping during Bubble1.0 - Webvan tried to build a huge profitable empire by delivering fresh produce to doorsteps of people who placed their orders online.

Webvan was somehow able to fool a lot of people (their VCs and the public) into believing that they had a very hot model and business all in place and only needed a large amount of cash to quickly expand into 26 cities. Some people say they grew too big too fast, and they never bothered to wait and see the success of their model in one city before scaling up to so many. This is completely unlike the Walmart model, which has grown organically from store to store based on their replication of the complete profitability and workability of their first store - and is now the largest company in the world!

Amazon has already been experimenting and delivering non-perishable items over a year ago. This time users can place orders online and pick them up themselves locally - or if the order is of a minimum amount - Amazon will drop it off anytime within a one hour timeslot at the customers place. Groceries will be delivered in temperature controlled environment.

The first thought that comes to mind is that Bezos has definitely got something up his sleeve. Amazon was an investor in HomeGrocer back in Bubble1.0, which was acquired by WebVan. So obviously Bezos has access to some stats which we dont. No doubt, there are similar locally run models in a select few cities which are working well. But I dont see the high-returns in this business. Perhaps it will come with scale?

By going back to build something that failed so miserably in the past - its a big risk. But, perhaps he wants to foray into a bigger service eventually - ultimately delivering a whole gamut of perishable items, medicines, tickets, FMCGs etc. Perhaps Bezos is eyeing an oppportunity to become a “Walmart-to-your-doorstep”? I really dont know. But, given his past acumen, he’s definitely up to something bigger.

Maybe they will build in a social shopping angle, and friends can ask friends to pick up and drop off stuff for each other earning points in some sort of barter-help mechanism.

— admin    Filed under: Uncategorized