Amazon’s partnership with online supermarket Knuspr marks a significant change in its grocery delivery approach, leading to the discontinuation of its AmazonFresh service after December 14, 2024. Initially launched to compete in Germany’s grocery market, AmazonFresh has seen a dramatic decrease in product availability. As it pivots to non-perishable items, the collaboration with Knuspr aims to provide fresh grocery options in urban areas, highlighting ongoing challenges in the online grocery sector amidst a competitive landscape.
Amazon’s recent collaboration with the online supermarket Knuspr marks a pivotal shift in its grocery delivery strategy, signaling the end of its AmazonFresh service.
Over seven years ago, Amazon embarked on a mission to carve out a substantial presence in Germany’s grocery sector, following successful launches in major cities across the USA, London, and Tokyo.
Initially available in Berlin and Potsdam, Prime members could later enjoy online shopping with AmazonFresh in Hamburg and Munich. However, escalating service costs and grocery prices have led to a significant rise in consumer expenses.
Drastic Reduction in Product Offerings
Previously, Amazon had offered grocery options through Prime Now in Berlin and Munich, featuring a limited selection of fresh items alongside non-perishable goods accessible to all customers. The launch of AmazonFresh in May 2017 expanded this for Prime members, allowing them to order fresh produce, meat, dairy, and bakery products. However, despite the initial goal of challenging the market leader Rewe, demand for AmazonFresh remained lackluster. The inventory has plummeted from over 85,000 items at launch to fewer than 9,000 currently, signaling a significant contraction of the original vision. E-commerce expert Matthias Schu stated that the ambitious expansion plan has ultimately faltered.
In a recent communication, Amazon informed customers that ‘AmazonFresh will cease operations on December 14, 2024.’ A company spokesperson confirmed this news, indicating that the service would no longer be available to customers in Berlin, Munich, and Hamburg after this date.
Continued Grocery Options for Consumers
In light of this transition, Amazon is refocusing its grocery offerings on non-perishable foods available on Amazon.de. Although AmazonFresh deliveries will continue until December 13, the company will not completely exit the fresh grocery market. Instead, a partnership with Knuspr has been established to serve the Berlin area, with plans to expand to the Rhine-Main region and Munich soon. Knuspr, a subsidiary of the Czech Rohlik Group, provides over 15,000 products at competitive prices, including local goods, with same-day delivery options.
This collaboration signifies Amazon’s acknowledgment of the challenges in the fresh food sector. In addition to Knuspr, Amazon is also working with Tegut, allowing Prime members to receive products from this supermarket chain within a two-hour window. Previously part of Prime Now, Tegut’s offerings have now been integrated into Amazon’s platform as a distinct section.
The Evolving Landscape of Online Grocery Shopping
Despite its growth, online grocery shopping remains a relatively small segment in Germany. According to the German Trade Association (HDE), it captured only 2.9 percent of the market share last year, up from a mere 0.8 percent in 2015. Even with slight increases during the COVID-19 pandemic, the vast majority of consumers still prefer to shop for groceries in person.
Revenue figures for delivery services are not comprehensively tracked, but estimates suggest that the sector generated about 3.7 billion euros in 2023—an increase from 736 million euros in 2015. Nonetheless, groceries ranked only ninth among online product categories, with clothing and electronics dominating the market. Overall, groceries accounted for less than five percent of total e-commerce revenue, which reached 79.7 billion euros.
An interesting trend in online grocery shopping is the pronounced urban-rural divide. In major cities like Munich and Berlin, online grocery shopping can account for up to 15 percent of sales. Conversely, many rural areas lack providers altogether, limiting consumer access. For companies like Amazon and Knuspr to achieve profitability, a certain level of population density is essential to maximize delivery efficiency.
Despite the pandemic-induced growth in the sector, several startups are now facing financial instability, with couriers like Gorillas and Getir exiting the German market. While companies like Knuspr and Picnic continue to expand, they still operate at a loss. In contrast, Rewe has maintained a successful delivery service for over a decade, recently enhancing its offerings through partnerships, including one with Lieferando. Experts predict that this model may prove more sustainable moving forward. The future of Amazon’s grocery endeavors remains uncertain.
This report was featured by MDR aktuell on November 14, 2024, at 2:48 PM.