Amazon(US:AMZN) Yahoo Finance·2026-01-20 11:00Core Insights - Amazon Fresh faces a critical decision: either scale the brand through deeper adjustments or discontinue it to allocate resources more effectively [1][2][3] Group 1: Current State of Amazon Fresh - Amazon Fresh has approximately 50 locations and is perceived as underwhelming compared to competitors, lacking significant differentiation beyond its smart cart technology [2][3] - The grocery sector remains challenging for Amazon, as most consumers still prefer traditional food retail outlets, necessitating a physical presence for success [3][4] - Amazon's history with physical retail has been mixed, with various ventures launched and closed, indicating a struggle to establish a strong foothold in the grocery market [5][6] Group 2: Innovations and Strategies - In 2025, Amazon focused on e-commerce innovations, particularly enhancing its same-day delivery service for perishables across over 2,000 locations, breaking down barriers between its marketplace and grocery business [7][8] - The same-day perishables service has reportedly exceeded expectations, with indications that customers are responding positively to the ability to add fresh items to their orders without high delivery fees [9][11] - Building consumer trust in the online grocery shopping experience remains a challenge, as many shoppers prefer to select their produce in-store [12][13] Group 3: Future Directions - If Amazon successfully establishes itself as a trusted online grocery provider, it may not need to maintain physical Amazon Fresh stores, with speculation that the company could phase them out by 2026 [14] - Amazon's upcoming big-box store is expected to focus on e-commerce fulfillment, potentially dedicating more space to warehousing than traditional retail, which could enhance its logistics capabilities [18][20] - The company is exploring how physical stores can integrate with its online ecosystem, indicating a long-term strategy to enhance its omnichannel presence [21][20]