Derek Thompson considers the implications of Amazon Prime Fresh, which allows members to “order fresh food from their couch from Amazon and expect to pick up groceries at the door in a matter of hours”:
A $300 subscription to Amazon Prime Fresh doesn’t just buy access; it also binds shoppers to Amazon as their overwhelming source of all Internet shopping. “It will help to make Amazon the starting point for online purchases — more than it already was — and give consumers even less of a reason to shop anywhere else,” Morningstar equity analyst R.J. Hottovy said. Being the starting point for online purchases is everything: Google’s biggest source of online advertising comes from searches with a shopping intent. Why look anywhere else when only Amazon will get it to you today?
He compares Amazon’s dominance in cloud and e-retail services to the “quasi-monopolies” enjoyed by cable companies:
Laying cable is hella-expensive for both legal and material reasons (Verizon abandoned its nationwide projects after covering less than 20 percent of the country), cable companies can charge such a mark-up on the communications bundle because they have a massive infrastructure advantage in a high-barrier industry.
Ditto Amazon, which is building a bundle of its own. Fresh Prime offers a unique package of services that takes advantage of the company’s lead in digital and physical infrastructure: infinite books, fast shipping, fresh groceries, free streaming. Who in the world would try to build a competitor to this strange amalgam of hugely expensive and hardly profitable services? No one. And, for [Amazon CEO Jeff] Bezos, that is precisely the point.