Amazon.com, Inc. shares are set to open more than 3 percent lower on Monday morning as a sell-off across the market continues to drive down the value of high-valued stocks. That’s not the only issue facing Amazon on Monday morning, however.
The firm is rumored to be launching its grocery delivery service in the UK next month, but growth may be slow as consumers worry about the quality of the food the firm delivers.
On Sunday UK paper, The Sunday Times, reported on the poor quality service that many users in the US have reported from Amazon Fresh. Iain Dey wrote that groceries were often “off, missing or smashed to pieces.” That’s not the kind of ad that Mr. Bezos and Co. want served up ahead of its first global launch.
Amazon food business may be rotten
Mr. Dey said that his own experience of the Amazon service in New York was poor. Of six orders, four contained food that was not at an edible standard. The firm first launched Amazon Fresh in Seattle, its home city, in 2007. Since then the segment has grown slowly and now covers Los Angeles, San Francisco, New York City, Philadelphia and parts of Northern New Jersey.
In one case, which Mr. Dey used to open his piece, his wife simply exclaimed “We are not eating that,” when presented with the smell of Lemon Sole from their apartment fridge. He said that each problem was apologized for and he was compensated with vouchers in order to make amends.
The piece may not represent all users of the Amazon Fresh service, but it may do some damage to the way potential users see it ahead of the UK launch.
Thom Blischok, a retail strategist for PWC’s Strategy&’s, told the Financial Times that “It has been very successful with the people who use it. They are quite pleased with the quality, the delivered service and the selection.”
UK grocers are bracing for the appearance of Amazon Fresh, one of the only businesses from the Seattle firm that appears averse to quick growth. After showing off its most recent earnings report Amazon shares shot to all time highs.
The firm was greeted with high praise on Wall Street for the growth of its Prime subscription business and its Amazon Web Services cloud segment.
Amazon.com shares crumble on China fears
At time of writing shares in Jeff Bezos’ firm were selling for $477.44, down 3.44 percent from Friday’s close. Shares in the firm are still well above their price on January 1, but fear across the market has already eroded a large amount of its recent gains.
The launch of Amazon Fresh in the UK is already compounding branding problems that started with a New York Times piece that called the firm out for the way it deals with workers in its warehouses.
Amazon Fresh is nothing like a core business for Jeff Bezos, and it’s one of the segments that shareholders care the least about. That means that it could be a bigger risk to the firm’s brand than any reward it can provide.
Risks like that are part of the reason Google Inc will become Alphabet this year. Amazon may want to think about making similar efforts to divorce the way people see its core business in order to protect it from potential failure of the Amazon Fresh roll out in the UK.