At first glance, it’s difficult to understand why established tech behemoths like Amazon (and recently Microsoft) would get into the grocery business. It’s one of the Top Ten Least Profitable Industries, clocking in at an average of 2.2% net profit margin. The leading national grocer, Kroger, only takes home a mere $2 Billion in net profit of their $120 Billion gross revenue.
Still, over the last five years, we’ve seen a mad rush to innovate this industry.
- Amazon spent more than $13 Billion on Whole Foods and just dropped all their prices an average of 20% today
- Microsoft is partnering with Kroger and Albertsons to upgrade their technical stack and provide futuristic shopping experiences
- Google is working with Walmart to allow shoppers to order groceries via Google Assistant
Why are the tech giants so interested in groceries?