Podcast Summary: Amazon's Grocery Strategy: A New Direction

Business Lunch with Roland Frasier
Date: February 12, 2026
Hosts: Roland Frasier (A), Richard Lindner (B)

Episode Overview

This episode dissects Amazon’s recent pivot in its grocery strategy—a high-profile decision to shut down Amazon Fresh and Go stores and double down on Whole Foods delivery, alongside a shift toward a “Walmart-style” operating model. Roland and Richard explore whether this is retreat or smart redirection, analyze expansion and pivot strategies, and provide actionable frameworks for entrepreneurs evaluating their own markets and business moves. Real-world examples and lessons from their own companies, Scalable and Digital Marketer, bring additional depth and immediacy to the discussion.

Key Discussion Points & Insights

1. Debunking the “Retreat” Narrative

• Amazon is Not Retreating: Roland and Richard immediately clarify that Amazon’s exit from certain grocery formats isn’t a step backward, but rather a disciplined reallocation of capital and focus.
  • Quote (Richard, 01:00): "Whole food sales are up 40% since Amazon acquired them in 2017. They have what, 550 locations. They're going to open another hundred stores … it's not a retreat, it's market expansion with capital allocation discipline."

2. Why Amazon Entered Grocery: Frequency, Wallet Share, and Habits

• Not Adjacency, But Frequency Expansion: Amazon targeted grocery not because it was merely adjacent, but because of its high purchase frequency and potential to increase share of customer wallet.

  • Quote (Roland, 02:26): "They didn't say what's nearby to what we already do. They said what do our customers already buy all the time that we don't currently touch?"

• Three Strategic Expansion Triggers:

  • Higher purchase frequency
  • Greater share of wallet
  • Structural lock-in to customer habits

3. Framework: Questions for Business Expansion

• What do my customers buy far more often than they buy my current product?

• What spend surrounds my business that I don’t participate in (before, during, after they buy from me)?

• Would owning this new category naturally improve retention and LTV?

  • Quote (Roland, 13:04): "The three questions that I feel like we came up with… What do my customers buy more often than they buy my current product... What spend already surrounds my business... If I owned this category, would retention and lifetime value naturally improve?"

• KPI Suggestions: Purchase frequency per customer, wallet share by cohort, cross-sell and attach rates.

  • Memorable Scenario (Richard, 14:11):
    • "If you had to get a hundred thousand dollars worth of advertising revenue on the books this quarter, who would you go to first? ...Your customer's already buying it. It's a different way of thinking about it."

4. Real-World Application: Scalable & Digital Marketer

• Scalable’s Origins: Born from the realization that growth at Digital Marketer caused new operational headaches for their customers—leading to the launch of Scalable’s systems.

  • Quote (Richard, 06:11): "We were very naive in the beginning and thought kind of marketing was the answer for everything ... really you can grow your way into a lot of problems and internal chaos."

• Expansion by Solving Customer & Core Business Problems Simultaneously: The sweet spot for expansion lies in solving both the customer’s and the core business’s revenue needs.

5. Pivoting Decisions: Build vs Buy

• Amazon’s Approach: Initially chose “build” over “buy” because of their tech and distribution strengths—but overlooked how grocery is an operations-first industry (not interface-first like most of Amazon’s legacy businesses).

  • Quote (Roland, 15:16): "They believed that technology and scale was going to reinvent grocery... Where it broke down was that grocery is operations first, not interface first."

• Innovation vs. Disruption: Amazon’s early grocery efforts were more disruptive than innovative—a miscalculation for the category.

  • Quote (Richard, 17:00): "They see themselves as disruptors and innovators … but I think Amazon really went innovation first on their decision of model."

• Capacity Matters in Build vs Buy: Internal bandwidth and team competence are often underestimated in expansion decisions.

  • Quote (Richard, 17:56): "The Biggest place that we underestimate in our buy versus build is capacity, internal capacity. And an accuhire can be amazing not just for what the company you're hiring for, but … for smart talent that was acquired."

• Identity Bias: Founders often default to build or buy based on self-perception—builders build, disruptors disrupt, acquirers buy. This can lead to over-extension or rash acquisitions.

  • Quote (Roland, 20:05): "If I see myself as a builder, I’m going to be biased towards that.… But the talent might not have the right set of skills to go and do a completely different kind of business."

Memorable Quotes & Moments

• Richard (01:00): "It's easy to kill things that aren't working. It's really difficult to kill things that are, when you can't do everything."
• Roland (02:26): "The smartest expansions usually target one of three things: higher purchase frequency, greater share of the customer wallet, or some sort of structural lock-in."
• Richard (10:56): "Buying frequency, are you having to invent a new habit? 66 days is how long it takes for the average human to install a new habit."
• Roland (15:16): "Grocery is operations first, not interface first. It's kind of like Tesla saying we're a tech company, not a car company, but you're also a car company."
• Richard (17:00): "There’s innovation within a model versus completely flipping a model on its head and trying to innovate. … Amazon really went innovation first on their decision of model."
• Roland (20:05): "If I see myself as a private equity roll upy kind of, you know, person or company, then I'm going to be acquisitive."

Timestamps for Key Segments

• 00:01–02:26: Setting the stage—Amazon’s grocery pivot isn’t a retreat; frequency and wallet share as drivers
• 04:01–08:46: Frameworks for identifying expansion opportunities; Scalable as a case study
• 10:10–13:04: Deciding what to stop, start, or pivot—habits, wallet share, and why not all adjacent spend is worth chasing
• 13:04–15:16: The three guiding questions for expansion; scenario-based thinking
• 15:16–17:00: Build vs buy analysis—Amazon’s journey and the pitfalls of ‘builder logic’
• 17:00–20:05: Innovator vs disruptor thinking; the overlooked importance of internal capacity in expansion

Actionable Takeaways and Framework (20:00–end)

1. When Expanding, Ask:

   • What’s frequent, habitual, and high-spend that I’m not tapping in my customer base?
   • Will adding or acquiring this actually increase customer lifetime value?
   • Do I have the capacity, team, and resources to build or is acquisition smarter?

2. Beware Founder Bias:

   • Builders, innovators, and acquirers see the world differently—check your own tendencies and emotional attachments.

3. Model Decisions on Real-World Case Studies:

   • Learn from both Amazon’s missteps and successes, and from adjacent companies’ pivots.

For entrepreneurs considering new ventures or pivots, this episode delivers both strategic frameworks and practical examples, challenging common assumptions and highlighting the complexity behind apparent “retreats” in business.