As Tony Hoggett joins Marc Lore’s Wonder, here’s why Amazon is struggling in the physical grocery space

As Tony Hoggett departs Amazon, where he served as SVP of Grocery, to join Marc Lore’s food delivery startup Wonder as Chief Operating Officer, supply chain consultant and former Amazon executive Brittain Ladd has taken to social media to argue that his former employer is failing in its attempts to crack the physical grocery market.

In a LinkedIn post, Ladd said: “According to over a dozen sources I spoke with since Tony Hoggett left for Wonder, Amazon’s physical grocery strategy is failing.”

“On 6th July 2021, Amazon hired Tony to be SVP for both physical stores and online. Tony was recruited from Tesco. He is truly an expert in all aspects of running a successful grocery retailer. He learned very quickly that Amazon doesn't understand the grocery business.”

Ladd argues that, instead of solidifying a single integrated grocery offering supported by a best-in-class distribution and logistics network, Amazon chose to build a chain of competing offerings - Amazon Fresh and now Amazon Grocery - even though it had acquired Whole Foods Market (WFM) in 2017.

According to his sources, "Amazon Fresh is struggling to keep products on the shelves because our supply chain is so bad. The stores are nice but sales are low as customers know the products they want will be out of stock. The customer experience is terrible.”

Ladd continued: “Tony identified that WFM had to improve. He had “big plans” to grow sales by requiring WFM to stock and sell Coke, Tide, Oreos and other CPG products in their stores. “Selling CPG products at WFM won’t dilute the brand,” was Tony’s point of view according to sources.”

“WFM CEO Jason Buechel reported to Tony, “but Buechel refused to listen to Tony.” Andy Jassy and Doug Herrington failed to support Tony and force WFM to sell CPG products even though “95% of the customers leave WFM stores to buy CPG products at a competitor of Amazon.”  Tony was frustrated. WFM’s refusal to sell CPG products forced him to “create workarounds for getting CPG products in the stores without customers seeing the products.”

Amazon is piloting an automated MFC from Fulfil inside a WFM at a cost of $7 million to hide CPG products in a back room. It is testing out an an Amazon Grocery store that sells CPG products near a WFM. A source told Ladd: “The workarounds add millions in costs. Everything we are doing is only to keep WFM happy.”

In 2025, Amazon is opening a 250,000 square feet Supercenter near Simi Valley, CA.

A WFM will be launched inside the Supercenter along with an Amazon Fresh store. Customers will be able to buy their favourite organics and Cheetos in one location. 50,000 square feet will be dedicated to automation. Fulfil is installing an MFC focused on chilled and frozen. Amazon is using its own MFC technology to manage all ambient temperature picking.

It has, meanwhile, ended its relationship with AutoStore. It wanted to invest in the 2024 RTIH Innovation Awards finalist or potentially acquire the company but AutoStore declined. Amazon walked away and partnered with Fulfil. It is also in discussions with Fabric and Instock.com.

As to who will replace Hoggett, Ladd says that his choice would be Eric Rimling. “Amazon should assess opening Whole Foods+ stores that will sell organics and CPG products. It should assess an acquisition of Publix,” he concluded.

An Amazon spokesperson told RTIH "We’re happy with the progress we’ve made in making it easier to shop for groceries, and saving customers time and money and our commitment to this space does not falter with Tony's departure.”

“Tony built a strong team with some of the best grocery and tech talent in the industry and this team will continue in its charge to make grocery shopping simpler, faster, and more affordable for customers."

2024 RTIH INNOVATION AWARDS

Grocery retail is a key focus area for the sixth edition of the RTIH Innovation Awards, which are now closed for entries.

The awards, sponsored by Vista Technology Support, Scala, CADS, 3D Cloud, Brightpearl by Sage’s Lightning 50, Business France, and Retail Technology Show 2025, celebrate global tech innovation in a fast moving omnichannel world.

Check out our finalists here.

Key 2024 dates

Friday, 25th October: Award entry deadline 

Tuesday, 29th October: 2024 shortlist revealed

30th October-6th November: Judging days

Thursday, 21st November: Winners announced at the 2024 RTIH Innovation Awards ceremony, to be held at RIBA’s 66 Portland Place HQ in Central London.