Amazon needs to ‘make a call on physical grocery’: Analyst

Amazon is a dominant force in online retail, but the company has become too unfocused and is missing out on opportunities in its core businesses, according to Bernstein analysts, who on Wednesday published an “open letter” to CEO Andy Jassy and the board, reports CNBC.

The online retailer remains a leader in ecommerce and cloud computing with Amazon Web Services. But in some other areas, including grocery, the company has invested heavily without reaping the results, the analysts said.

“We fully support Amazon’s efforts to uncover and capture the next AWS-sized opportunity,” wrote Bernstein’s Mark Shmulik. “But what we’ve seen recently is a company simply pursuing too many ideas, with weaker ideas taking away the oxygen, capital, and most importantly focus from the truly disruptive initiatives that ‘only Amazon can do.’”

When it comes to Whole Foods, Amazon Fresh, and Amazon Go, Amazon needs to “make a call on physical grocery,” Shmulik wrote. 

Amazon bought Whole Foods for $13.7 billion in 2017. Recently, the company paused further expansion of its Fresh and Go stores as Jassy re-evaluates the concept’s economics.

Instead of continuing to “tinker with” Fresh and Go, Shmulik advised that Amazon should “purchase a proven concept such as potential divested KR/ACI stores,” referring to the stores Kroger and Albertsons may sell off as part of their potential merger.

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