Amazon to take on supermarkets with new ‘brick and mortar’ initiative

Amazon is not resting with a new drone delivery service, with its latest initiative the online retailer it taking on brick-and-mortar retailers on their own turf (See: Amazon's drone plans may take years to materialise).

USA Today cited three people familiar with Amazon's latest as saying the e-commerce giant was working on a new business known as Pantry that would allow it to  further compete with brick-and-mortar retailers.

Amazon's latest foray into the package goods business would challenge Wal-Mart and Costco, as chief Bezos sought to expand his ever-growing empire. The new business venture is set for a launch in 2014.

According to commentators, it made sense that Amazon was looking to compete with Sam's Club and Costco, given that it already had a membership structure, similar to both of those businesses.

Amazon Prime, through which users get free two-day shipping and countless movies and television shows, costs $79 a year.

Amazon has not yet publicly disclosed how many members Prime had, but the company said it "signed up millions of new Prime members" in its third quarter, in which it saw revenue surge 24 per cent year over year to $17.09 billion.

Meanwhile, Amazon.com Inc has taken its AmazonFresh grocery delivery service into its third US market, as it expands into San Francisco after it tested the service in Los Angeles and Seattle.

The AmazonFresh site has now gone live and accepts orders from select San Francisco zip codes.

Users have access to over 500,000 products including produce, personal care items and electronics and also local goods from purveyors such as the San Francisco Fish Company.

Customers could sign up for a free 30-day trial, following which they would be charged $299 to join the Prime Fresh service, which included Amazon's Prime program.

Members can avail free same-day and early-morning delivery for orders over $35, with orders placed by 10 am to arrive by dinnertime; requests made by 10 pm would be delivered by breakfast the next day.

The company opened a massive new Bay Area fulfillment warehouse east of Livermore in October, known as the Tracy facility spread over 1-million square feet.

AmazonFresh, which launched in Seattle in 2007 and did not roll out to Los Angeles until June.

In Northern California, the service is expected to face competition from Google Shopping Express, which launched a test run with free same-day delivery in the Bay Area in the spring.