How so? I live in Seattle, and Amazon's placement of their test stores has been quite poor (picking a roadway on the wrong side of a major bridge, where from 2pm to 6:30pm its a parking lot), they have set them up exclusively for people who drive, and their previous efforts of grocery delivery have fizzled out, with Amazon Fresh having significantly declined in usage to the point that Amazon Prime customers are getting $50 free vouchers to use on Amazon Fresh on a monthly basis.
Amazon can't push the volume needed to compete with the heavyweight in this region (Kroger, thru their Fred Meyer, Safeway, QFC & Albertsons brands control 90% of the grocery volume in Seattle) thus their prices will always be significantly higher. That combined with poor location and a core misunderstanding of their market (eg. who in your average household is buying groceries and what goods/price point will they buy at) will limit their potential market.
Ah shoot, that is right! Safeway and Albertsons merged, don't know why I thought they'd become part of Kroger. That being said, in the Puget Sound Region (where Amazon is trying to launch this) 90% of the market is controlled by the aforementioned players. It'd take massive volume to get close to the price points any of them can hit, cause SuperValu and other wholesalers are not gonna give Amazon volume discounts otherwise.
Amazon can't push the volume needed to compete with the heavyweight in this region (Kroger, thru their Fred Meyer, Safeway, QFC & Albertsons brands control 90% of the grocery volume in Seattle) thus their prices will always be significantly higher. That combined with poor location and a core misunderstanding of their market (eg. who in your average household is buying groceries and what goods/price point will they buy at) will limit their potential market.