. One reason is that initial investments are high, with outlays required for infrastructure (mainly new or upgraded operations), software, and marketing, among other things, and potentially higher operating costs. The investments also come with higher risk because of market uncertainties. A well-balanced assortment is vital for sustainable growth as profitability, logistics requirements, and costs differ significantly across product categories (for example, canned food versus fresh food).
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Pure online grocers find it difficult to enter the market on a broad scale, because of fierce price competition and start-up costs. They are more likely to operate as niche players in large metropolitan areas working with logistics and shopping partners (such as Amazon) to provide home delivery services. They primarily sell small assortments of premium fresh products geared to less price-sensitive shoppers.