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8/2/2007
08:03 PM
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Amazon.com Gears Up to Deliver Real Apples With Amazon Fresh

Amazon has launched an invite-only beta test of a new online grocery delivery service called Amazon Fresh in a Seattle suburb called Mercer Island.

If Safeway can delivery groceries ordered online, why not Amazon.com?

The obvious answer is Webvan, the online grocery delivery service that lost hundreds of millions during its brief 1999 to 2001 lifespan as a public company.

But Amazon doesn't think about that. It has launched an invite-only beta test of a new online grocery delivery service called Amazon Fresh in a Seattle suburb, Mercer Island, Wash., without a thought for Webvan's inglorious end.

"We don't really focus on former companies or competitors," said Craig Berman, an Amazon spokesperson.

And yet Amazon tried to lure Terry Drayton, founder of HomeGrocer.com, to run Amazon Fresh, but failed to reach a deal, according to the Seattle Post-Intelligencer.

In May, 1999, Amazon invested $42.5 million in HomeGrocer to acquire a 35% stake in the company. Webvan bought HomeGrocer in June, 2000, for $1.2 billion in stock, which would become worth very little the following year.

Though it isn't focusing on former companies or competitors, Amazon at least can draw on its own experience in the food delivery business. "We've been serving customers with gourmet food since 2003 and [dry] groceries since last year," said Berman. "We've learned a lot from that. With this effort, we're starting small and we'll expand when we feel that the experience is what customers expect from us."

Small means a dozen trucks and a refrigerated warehouse outside Seattle.

"For quite a while customers have been asking us, 'When am I going to be able to buy eggs from Amazon, when am I going to be able to buy fresh fruit?'" said Berman. "Taking that feedback, what you see now is Amazon Fresh. We're in an early stage of a beta test of a service providing fresh, frozen, and perishable goods to our customers."

Amazon doesn't have a specific time frame for when Amazon Fresh might be available elsewhere in the U.S. The company intends to evaluate how its Seattle operation is doing and to make decisions about expanding the service at some indeterminate point in the future.

Amazon Fresh's most interesting innovation is its Pre-Dawn Delivery option, which allows customers to place their orders online and find food on their doorsteps when they wake up the next day, provided passersby with shopping carts don't decide to help themselves first.

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