Amazon putting brakes on Amazon Fresh expansion

Amazon is not opening any additional stores under the Amazon Fresh banner in the immediate future.

The high-tech Amazon Fresh format made its debut in 2020, in Woodland Hills, Calif. There are currently about 44 Amazon Fresh locations, with close to 20 in California.

Speaking on the company’s fourth-quarter earnings call, Amazon chief executive Andy Jassy said that to have a mass physical store offering, “you need a different offering. And that’s what we’ve been working on with Amazon Fresh.”

“We’re doing a fair bit of experimentation today in those stores to try to find a format that we think resonates with customers,” Jassy told analysts on the call. “It’s differentiated in some meaningful fashion and where we like the economics.”

Jassy said that Amazon is not going to expand Fresh doors until it has the right equation of differentiation and economic value.

“But we’re optimistic that we’re going to find that in 2023,” he added. “We’re working hard at it. We see some encouraging signs. And when we do find that equation, we will expand it more expansively.”

Jassy had high praise for Whole Foods Market, calling it “the very best organic physical-store experience” and a “very significant-sized business that’s continuing to grow.” The grocer recently opened its first Montana store.

Fourth Quarter

Amazon’s net income plunged to $0.3 billion, or $0.03 per share, in the quarter ended Dec. 31, compared with $14.3 billion, or $1.39 per diluted share, in the year-ago quarter. (Amazon said its Q4 2022 income includes a loss of $2.3 billion included in non-operating income – expense - from the common stock investment in Rivian Automotive.) 

For the full year, Amazon posted a net loss — its first since 2014 — of $2.7 billion.

Revenue increased 9% to $149.2 billion, compared with $137.4 billion last year and beating analysts’ estimates of $145.42 billion.

Amazon’s brick-and-mortar business increased year-over-year, while its direct e-commerce revenue declined. Sales at Amazon’s physical stores, including Whole Foods Market and Amazon Go, rose 6% to $4.96 billion, just topping estimates. Direct e-commerce sales fell 2% to $64.53 billion, missing estimates of $65.13 billion.

[Read More: Amazon Q4 sales rise 9%; profit takes a beating]