Amazon targets grocery delivery, begins testing AmazonFresh in Seattle

An Amazon Fresh worker delivers groceries in Seattle, where the ecommerce giant has deployed a fleet of 12 trucks to test its new service. Customers also can pick up grocery orders at certain sites.

SAN FRANCISCO — Amazon.com Inc. is planning a major rollout of an online grocery business that it has been quietly developing for years, targeting one of the largest retail sectors yet to be upended by ecommerce, two people familiar with the situation told Reuters.

While food is a low-margin business, Amazon could outperform similar online grocery services by delivering orders for higher-margin items like electronics at the same time.

The company has been testing AmazonFresh in its hometown of Seattle for at least five years, delivering fresh produce such as eggs, strawberries, and meat with its own fleet of trucks.

Amazon is now planning to expand its grocery business outside Seattle for the first time, starting with Los Angeles as early as this week and the San Francisco Bay Area later this year, according to the two people who were not authorized to speak publicly.

If those new locations go well, the company may launch AmazonFresh in 20 other urban areas in 2014, including some outside the United States, said one of the people.

Bill Bishop, a prominent supermarket analyst and consultant, said the company was targeting as many as 40 markets, without divulging how he knew of Amazon’s plans.

An Amazon spokesman did not respond to a request for comment on Tuesday.

Amazon’s expansion plans are a potential threat to grocery chains such as Whole Foods Marketand Kroger Co., Safeway Inc., , as well as general-merchandise retailers Wal-Mart Stores Inc. and Target Corp., which sell a lot of groceries.

“Amazon has been testing this for years and now it’s time for them to harvest what they’ve learned by expanding outside Seattle,” said Mr. Bishop.