Amazon's New "Pantry" Service to Compete with Costco, Sam's Club
December 13, 2013 11:26 AM
Amazon Prime members will soon be able to order warehouse items from the new Pantry service
already delivers everything from books to clothes to electronics, and even digital services like video streaming -- so why not your groceries, too?
, Amazon is launching a new service called "Pantry," which will target warehouse club members who typically shop at stores like Costco and Sam's Club.
At launch, Pantry will offer around 2,000 products like kitchen paper rolls, canned food, pet food, cleaning supplies and grocery/beverage items. Amazon Prime members will then be able to put as many of these items into a box as they can fit (but only up to a certain weight limit).
If their items fit and don't run over the maximum weight, Amazon will ship it for a small fee.
This could be a big deal for Amazon, since the consumer packaged goods (CPG) market is worth about $850 billion a year in the U.S. Amazon's typical online shoppers fall into the same demographic as warehouse club members, according to
, so the benefits of launching Pantry could be huge.
E-commerce companies have tried to get into the packaged goods market for some time now, but have had difficulty with the high cost of shipping online orders. The problem is that many items cost about as much as it would to ship them.
But Amazon is hoping that its box method with a certain weight limit will increase the revenue per order and cover the shipping costs.
Pantry is expected to officially launch in 2014.
Amazon has already proved to make a splash with its online grocery delivery service called
It started out in Seattle roughly five years ago, and in July of this year, the company announced that it was expanding the service to other cities. Los Angeles and San Francisco were first on the list with rollouts scheduled this year, and if all goes well, Amazon plans to expand AmazonFresh even further to 20 other cities in 2014 (including some outside of the U.S.).
"Paying an extra $500 for a computer in this environment -- same piece of hardware -- paying $500 more to get a logo on it? I think that's a more challenging proposition for the average person than it used to be." -- Steve Ballmer
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