Some observers of Amazon Prime’s new charges for grocery delivery are predictably disturbed by news that Amazon Fresh customers now will have to order at least $150 in merchandise for a single order to get free delivery.
Perhaps they should not be so surprised. According to consultants at McKinsey, “a typical North American grocer achieves a positive net profit-and-loss (P&L) margin of about $4 on a traditional $100 grocery basket when the customer is walking the aisles in the store.”
When the grocer has to manually pick from the store and deliver to the customer, net P&L margin becomes approximately –$13 for a $100 online grocery basket order.
Even with good cost controls, grocery delivery remains a difficult business model.
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