Amazon Fresh Is Done. Here's What That Means For Your Grocery Delivery

Even for a company as successful as Amazon, not every experiment works out. And now, after only half a decade in operation, the online retail giant has announced it's closing its physical Amazon Fresh and Amazon Go-branded stores. The two concepts were each built to serve a different niche, with Amazon Fresh, launched in 2020, being more of a traditional brick-and-mortar grocery store, and Amazon Go, which first opened in 2018, being a convenience store. However, in the announcement from the company, it appears the two physical Amazon-branded stores never quite managed to stand out.

The press release says that while Amazon Fresh and Go have shown some promise, "we haven't yet created a truly distinctive customer experience with the right economic model needed for large-scale expansion." Instead, many of the stores will be converted into the more successful Amazon-owned Whole Foods, which has seen big growth over the past decade. That amounts to just over 70 Amazon Fresh and Go locations closing, although it's not clear how many will become Whole Foods.

But if you're a fan of Amazon Fresh delivery, that is sticking around for now. The company says its grocery delivery has been growing rapidly, and part of this move is about doubling down on what Amazon does best. With customers not really getting the difference between Amazon Fresh and Whole Foods, it looks like the company is trying to clearly differentiate between its Amazon brand for online shopping and Whole Foods for physical locations.

The separation of the brands into physical and online is also clear in another expanding concept, Whole Foods Market Daily Shop. Currently with only five locations, this is a smaller "grab-and-go" concept that seems to be targeting a similar market as Amazon Go, and the company says it plans on expanding the brand.

Yet there is one aspect of Amazon Go that seems like it's going away forever: the cashierless "just walk out" experience. The system was a signature aspect of Amazon Go, using cameras and sensors to track what items customers left the store with, and then automatically charging them without any need to stop and pay. Amazon found that the work of programming the tracking system made changing displays and the layout of the store much more complicated, hurting its ability to rotate new items in and out. While the technology is still being used in some places, like stadium vending, it appears it will be gone from Amazon-owned physical stores for good.

In the end, Amazon Fresh just didn't stand out in a grocery market that is highly competitive. It was too similar to existing grocery brands to draw away loyal customers, while the higher-end Whole Foods has much more loyalty and a distinct identity behind it. The company is far from done with groceries, but it will be more about Amazon competing with Wal-Mart Plus online delivery than anything.