Online giant Amazon has recently encountered problems with their food and beverage delivery service Amazon Fresh in Germany and legal problems with ist alcohol delivery service Prime Now in California.
“In Germany Amazon Fresh has been a veritable non-starter,” read today one of today’s headlines of Frankfurter Allgemeine Zeitung, one of Germany’s most renowned daily newspapers.
Background of the story is the announcement of Germany’s DHL delivery service to end its partnership with Amazon’s food and beverage delivery system Amazon Fresh after only 2 years, due to disappointing results. “The market for online ordered fresh food has been far behind expectations to date. Due to this reason and the complexity of the whole process, we have significantly reduced our activities in this area,” confirmed a DHL spokeswoman in an interview with Reuters.
Although Amazon’s officials tried to play down the problems, saying that the service had received positive feedback in Germany, it seems clear that Amazon did not reach its goals in its second biggest market outside of the United States.
However, Amazon’s German food delivery service does not seem to be directly affected since the online giant has in recent years set up its own distribution network in Europe’s biggest retail market and will now extend its own delivery service. In addition, Amazon has proven with its traditional non-food business that it can stand years of losses before achieving a break-though.
One of the main reasons for the failure seems to be the high population density and the intense competition between food retailers in Germany, where people can find a supermarket even in small villages in the countryside. This enables customers to do their daily shopping in the neighborhood which is not the case in many other markets. Last year, the e-commerce made up only about 1.2 per cent of food sales in Germany.
Amazon’s problems in California are different: The California Department of Alcoholic Beverage Control has started an investigation in Amazon’s Prime Now delivery service for wine,beer and spirits after Wine Searcher, a web search engine that directs customers to a retail outlet selling alcoholic beverages, reported possible violations of California liquor law.
California has a law requiring companies that deliver wine and spirits to have a brick-and-mortar store. “The purpose of the law would seem to be to prevent a big company from dominating the liquor delivery market by operating delivery-only warehouses without the expense of a store open to the public,” Wine Searcher argued.
However, when Wine-Searcher journalist W. Blake Gray visited this week an Amazon liquor store in Los Angeles, the shop did not have a normal storefront, did neither post store hours nor displayed items for sale and, in fact, did not have any alcoholic beverages available for sale.
Wine-Searcher reported today that Amazon has now taken steps at some of its locations to comply with the terms of its liquor licenses.
Journalist W. Blake Gray visited again several Amazon stores adjacent to Amazon warehouses in California. He experienced that the stores visited offered only 4 to 5 types of wines, one type of beer and one type of spirit while the warehouse next to it offered a variety of 230 wines and 82 whiskies not counting other spirits and beers. When asked an Amazon spokesperson replied, "We are not required to offer the full selection for sale in person. We are in compliance with the law."
Gray says: “What I saw in Sacramento and Sunnyvale – an unstaffed table, a button to push for assistance, and fewer than eight products for sale, none of them physically on display – is not what most people would call a ‘store’." And he concludes: “Amazon is making a mockery of California law by doing the bare minimum to comply.”