Amazon has a new service called "AmazonFresh" which will be selling groceries online. The giant Internet retailer is said to be prepping a major expansion into the grocery market, planning to offer eggs, strawberries, and everything else in dozens of cities, sources tell Reuters.
Amazon has been testing the service in Seattle where its headquarters are based and plans to expand it to Los Angeles as early as this week, the report notes. The San Francisco Bay Area would be the second market later on this year and if all goes according to plan, Amazon will roll out the service in another 20 markets in 2014.
Sources familiar with AmazonFresh's expansion plans said new warehouses will have refrigerated areas for food, but also space nearby to store up to one million general merchandise products, in some cases.
Meanwhile, current competitor Wal-Mart is already testing same-day and next-day delivery of online grocery and general merchandise orders in the San Francisco Bay Area.
Selling fresh fruits and vegetables online is a difficult business that comes with expensive costs, like fuel-hungry refrigerated trucks, which leads to small margins. But Amazon's move into online groceries isn't really about making money. Instead, it is seen as a way of making Amazon's burgeoning same-day delivery service more cost efficient.
