Remember when Amazon.com(s AMZN) was simply an online bookstore? How quaint. The Seattle-based e-commerce giant now has specialized divisions for seemingly everything under the sun: Music, diapers, health and beauty products, pet food, children’s toys.
The company is now putting extra emphasis on a particularly big market segment: Groceries.
Quidsi, the wholly-owned Amazon subsidiary, announced Monday the launch of a new grocery category within its Soap.com website. The grocery category will carry more than 10,000 non-perishable items including coffee and tea, snacks, cereal, pasta, baking ingredients and canned items — a mix of foods “equivalent to that of a non-perishable selection of a large supermarket,” the company says. Brands on the site run the gamut from big-name staples such as Cheerios to specialities such as organic and gluten-free labels. As will all Amazon’s Quidsi sites (Diapers.com, Wag.com, YoYo.com) all orders will arrive within two days, with free shipping for orders over $39.
Now, Amazon has had grocery items for sale on its site for some time now — so there is a bit of overlap here with Soap.com’s new segment. For example, you can buy a set of three 16.2 ounce boxes (a total of 49 ounces) of Multi-Grain Cheerios from Amazon.com for $12.02; Soap.com has a set of two 9 ounce boxes of Multi-Grain Cheerios (18 ounces total) on sale for $9.99. The bonus with Soap.com is ease: It provides free shipping for orders over $39 across all Quidsi’s sites. The inter-site competition could be an issue — but the bottom line, of course, is that either way Amazon ultimately benefits financially.
The launch of the groceries vertical is just the latest in a series of new sites launched by Quidsi since it was acquired by Amazon nearly one year ago, in November 2010. Before then, Quidsi was best known for Diapers.com, and some people balked at the $500 million in cash that Amazon paid for the company. But it’s clear now that diapers was just a jumping off point: Quidsi’s back-end architecture can serve as a platform for practically any market, as evidenced by the recent launches of pet products site Wag.com and online toy store YoYo.com.
Grocery represents a massive market — supermarkets in the U.S. make upwards of $560 billion annually — and grocery shopping is one thing that most people still go to brick-and-mortar stores to do. As Amazon does not need to spend money on lots of real estate or on the same kinds of sales tax as physical stores, it can offer low prices while getting bigger margins for itself. With Quidsi also focusing on the space, groceries could become an even bigger business for Amazon in the long run.