Amazon's attempt to disrupt grocery market not going as planned

Amazon CEO Andy Jassy says the retailer has paused expansion of its Amazon Fresh stores

Online retail behemoth Amazon has not yet found the formula for dominance in the grocery industry after years of trying, COE Andy Jassy admitted this week.

The chief executive said on the company's fourth-quarter earnings call Thursday that while Amazon has built what he called a "pretty significantly sized grocery business," it hasn't gained much ground in capturing market share in perishables, which would require a lot more brick-and-mortar locations.

Jassy touted the selection and growth of Amazon's Whole Foods stores but said, "if you want to have a mass physical store offering, you need a different offering." The CEO said that is what Amazon has been working on with its Amazon Fresh locations.

But the ecommerce giant has not found what works with Amazon Fresh just yet.

Inside an Amazon Fresh store in Pasadena, CA, Thursday, September 15, 2022.

CFO Brian Olsavsky said on the same call that Amazon has shuttered some of its Amazon Fresh and Amazon Go store locations "with low growth potential" last quarter, resulting in $720 million in impairment charges.

Jassy went on to reveal that Amazon leadership has made the decision to hit pause on expanding beyond its current Fresh shops while recalibrating to find what works for the consumer.

Andy Jassy, chief executive officer of Amazon.Com Inc., speaks during the Bloomberg Technology Summit in San Francisco, California, on Wednesday, June 8, 2022.

"We've decided over the last year or so that we're not going to expand the physical Fresh doors until we have that equation with differentiation and economic value that we like, but we're optimistic that we're going to find that in 2023," Jassy said. "We're working hard at it. We see some encouraging signs. And when we do find that equation, we will expand it more expansively."

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