Analyst: Amazon lacks the expertise to grow its grocery business

High inflation and slowing consumer spending has weighed on Amazon's (AMZN) business recently, but the online retailer continues to invest in its Amazon Fresh grocery business. Amazon CEO Andy Jassy wrote in his annual shareholder letter that grocery presents a big opportunity and that the will company will have to expand the footprint of physical stores.

But one analyst told Yahoo Finance's Dave Briggs that it doesn't have expertise in that industry to be successful. "The problem, really, here is not that they can't open more stores. I think they need expertise to open these grocery stores. Grocery is a very different business," Bloomberg Intelligence Senior E-Commerce & Athlesiure Analyst Poonam Goyal said. She goes on to recommend the company needs to "hire someone who knows the grocery business inside out and knows how to build it at scale."

Key Video Moments:
0:09 Opening grocery locations at a slow pace
0:26 Amazon does not have the expertise they need

Video Transcript

DAVE BRIGGS: Are they opening new locations of Amazon Fresh, and what's your best bet? What do you think they'll do in this space?

POONAM GOYA: They are opening locations, but at a very, very slow pace, to the extent that you just talked about. I think the problem, really, here is not that they can't open more stores. I think they really need expertise to open these grocery stores. Grocery is a very different business, an in-store business, right? Amazon is an online retailer. They don't have the expertise that you need to open grocery at scale.

So the question that-- what I would be looking for is for them to hire that expertise. Hire someone who knows the grocery business inside-out and knows how to build it with scale. You have to have location, right? You need to know where to open the stores. You need to be able to open stores fast. That's not something that they do.

They had smaller stores. They had bookstores that they closed down and Amazon Go stores. They're very small store footprints, where to open a grocery store you need a larger footprint. You need strip centers that are attractive. And I think they just need the expertise in that area to really scale this further, if they want to.