Amazon Fresh Died, Should Something in Your Business?

TL;DR: Amazon did not retreat from grocery. They shut down formats that did not compound and doubled down on frequency, wallet share, and habit through Whole Foods. The lesson is to expand where customers already spend frequently, solve constraints your own success creates, and choose build or buy based on capacity and compounding impact, not identity or ego.

Amazon Didn’t Retreat. They Reallocated.

When Amazon announced it was shutting down Amazon Fresh and Amazon Go stores, most people read it as failure.

It was not failure.

It was discipline.

Amazon did not exit grocery. Whole Foods continues to grow. Locations are expanding. Delivery is strengthening. What they killed was a format. What they protected was frequency, wallet share, and habit.

That distinction is the lesson.

Expansion Is Not About Adjacency

Most founders ask the wrong question.

They ask, “What is adjacent to what we do?”

The better question is, “What do our customers already buy all the time that we do not touch?”

Amazon already dominated non-perishables. Big baskets. Infrequent purchases. Long tail selection.

What they did not own was daily behavior. They did not own food spend. They did not own the habit.

Grocery was not adjacency. It was frequency and wallet share expansion.

The strongest expansions usually target higher purchase frequency, greater share of wallet, or structural lock in to behavior already happening. If your move does not touch at least one of those, it is probably a distraction.

When Success Creates the Next Problem

In one of my businesses, we helped entrepreneurs grow revenue through better marketing.

It worked.

Growth increased headcount. Headcount increased complexity. Complexity created chaos.

We solved the marketing constraint and created an operating constraint.

That led to building an operating system business. Not because it was adjacent. Because it solved the next bottleneck.

Sometimes your best expansion is solving the problem your own success created.

Ask yourself what constraint is preventing your best customers from going deeper. Ask what new problem your product created by working.

When expansion strengthens the core instead of distracting from it, you get compounding instead of chaos.

The Habit Filter Most Entrepreneurs Ignore

Amazon tried to build grocery from scratch first.

They believed technology and scale could reinvent it.

But grocery is operations first, not interface first. It is local, labor dependent, perishable, and built on trust and habit.

If you are expanding, you must ask whether you are creating a new habit or attaching to an existing one.

Installing a new habit takes sustained consistency. That means sustained marketing cost, sustained friction, and sustained resistance. It is usually far easier to enter a behavior that already exists than to invent a new one.

Amazon ultimately leaned into Whole Foods, integrated Prime, improved delivery, and innovated inside a proven model instead of trying to overthrow it.

Innovate within the habit unless you are certain you can change it.

Build or Buy Is an Identity Test

After deciding where to expand, the next question is build or buy. Amazon built first. Then they bought Whole Foods.

Most founders get this wrong for emotional reasons. Builders want to build. Acquirers want to buy. Disruptors want to disrupt.

Identity creates bias.

The correct decision depends on internal capacity, capital, speed to revenue, operational complexity, and depth of talent. Building consumes bandwidth. Buying accelerates time to revenue and often comes with capable people.

The hidden killer is capacity.

If expansion pulls your strongest operators off the core business, you may damage the very engine that funds everything else. Expansion should never starve the engine.

The Practical Filter

If you want a simple way to evaluate your next move, run it through three questions.

• What do my customers buy more often than they buy from me?

• What spend surrounds my business that I do not participate in?

• If I owned this category, would retention and lifetime value naturally improve?

Then look at the numbers. Does purchase frequency per customer increase? Does wallet share expand? Do cross sell and attach rates improve?

If those metrics do not move, your expansion is theater.

The Real Lesson

Amazon did not fail at grocery.

They experimented. They allocated capital. They killed what did not compound. They doubled down on what strengthened frequency and habit.

Most entrepreneurs cling to experiments because of sunk cost bias and emotional attachment.

The companies that win do not. The smartest growth move is not always adding more.

Sometimes it is choosing the format that compounds best and cutting the rest.

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Whats Going On Recently

Waiting is often the most expensive decision you never realize you made.

I’ve seen founders hesitate for “more cushion,” “more certainty,” or the “right time”, only to watch the opportunity disappear or double in price.

The cost rarely shows up on a balance sheet. It shows up in enterprise value you never capture.

After decades of deals, I’ve learned something most operators don’t: readiness is usually higher than confidence.

What’s the cost if you’re wrong about not being ready? Watch the video below.

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