Amazon to double down on grocery business despite recent setbacks

Amazon has intentions of "doubling down" on its physical grocery business when the company lands on the format it likes, CEO Andy Jassy indicated in a recent Financial Times interview. 

His comments to the outlet come not long after he said during the latest earnings call that the company had chosen to pump the brakes on growing its Amazon Fresh footprint while it determines what works best for consumers. The e-commerce giant also revealed on the call its fourth quarter had $720 million in impairment charges stemming from closing some Amazon Fresh and Amazon Go stores "with low growth potential."

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The Financial Times reported Monday that Jassy, who took over as CEO in 2021, said Amazon is "hopeful that in 2023, we have a format that we want to go big on, on the physical side." 

"We have a history of doing a lot of experimentation and doing it quickly," the outlet quoted him as saying. "And then, when we find something that we like, doubling down on it, which is what we intend to do."

Jassy also reportedly said in the interview many Amazon Fresh stores "opened right in the heart of the pandemic," meaning they "haven’t had a lot of normalcy." He told the Financial Times that Amazon was "experimenting with selection, checkout formats, assortment, price points."

"I’m encouraged we have several that I think are promising," he reportedly added.

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During the earnings call earlier in February, Jassy said Amazon "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," something he said the company is optimistic it will find this year.

"We’re working hard at it," he continued at the time. "We see some encouraging signs. And when we do find that equation, we will expand it more expansively."

Jassy said on the call with analysts and investors he thought Amazon has a "pretty significant-sized grocery business" but acknowledged it currently "doesn’t have a big market segment share in perishables." 

He also praised Whole Foods, which Amazon bought in 2017, as a "good business for us in the grocery space" that’s growing and predicted grocery would become "omnichannel" over time.

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For the fourth quarter, Amazon reported the company overall generated $149.2 billion in net sales, up from the $137.4 billion it posted in the same three-month period the prior year. Its net income, meanwhile, narrowed by 98% to $278 million.

Ticker	Security	Last	Change	Change %
AMZN	AMAZON.COM INC.	181.28	-2.04	-1.11%

The price of Amazon stock was roughly $99.50 on Monday, making it nearly 16% higher than it was at the start of the year and over 35% lower over the past 12 months. 

Breck Dumas contributed to this report.