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Bagged by Amazon

I remember going to the grocery store when I was small. Mostly, I remember the aisles. Aisles are magic in grocery stores. They organize everything. And they create anticipation:

"Ooooooh, we're coming up on aisle 10! Candy!"

Now, Amazon.com (Nasdaq: AMZN  ) , a Motley Fool Stock Advisor pick, hopes to end all that by hawking sundries over the Web. You'll pardon me if I'm a little bitter. Of course, I'm also a Fool, and that makes me a realist.

That's why I decided to put the beta site to the test this morning. What I found was unexpected. Amazon Grocery appears to be dealing exclusively in bulk items. This isn't about taking on Kroger (NYSE: KR  ) and Safeway (NYSE: SWY  ) ; it's about taking out Costco (Nasdaq: COST  ) and Wal-Mart (NYSE: WMT  ) .

At first, I was thrilled. The receipt from our last Costco visit shows we paid $236.53 for needed items. If Amazon can get me better prices on Cascade dish detergent, or Frosted Mini-Wheats, or size 5 Huggies, I thought, then I'm in.

Unfortunately, Amazon doesn't want me buying two-packs of Mini-Wheats. It wants to sell me a pack of seven, and spend $28.77 for the privilege. I've got three kids, Jeff, not 30. Call me when I open a restaurant, or an Army barracks. Sheesh.

Costco and Wal-Mart do well because they cater to growing families with big needs. For example, it makes a lot of sense to sell a 15-pack of Bounty paper towels to us. We're a family of five. We'll easily go through that in a month. But it would take me a year to go through the six packs of deodorant Amazon is hawking; there's simply no reason for me to pay $16.18 to consume precious bathroom storage space.

What's more, there's little evidence that I'd do better with Amazon. Go back to the Mini-Wheats example. We paid Costco $6.79 for a two-pack. That's $3.39 per bag of cereal. Amazon's seven-pack, however, sells for $28.77; that's $4.11 per bag! Where's the savings?

I never thought bulk could be taken to the extreme without somehow involving stretch pants. But Amazon seems to have done it. Remember, Fool: Spend moola only on what you need. Saving a few pennies for items that you'll pitch in the trash later is exactly like setting fire to your wallet. And that's, you know, bad.

My quest to get paid to drink beer continues. Maybe someday Amazon will be able to help. But I won't die thirsty waiting.

Money matters keeping you up at night? Sign up to get asneak peekat our new money management service, Motley Fool GreenLight. It costs nothing more than theprice of a click.

Amazon.com and Costco areMotley Fool Stock Advisorselections. Wal-Mart is aMotley Fool Inside Valuepick.

Fool contributor Tim Beyers likes beer and Blue Collar TV. Oh yeah, and he likes to save moola, too. Git-r-done! Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out what is in his portfolio by checking Tim's Fool profile. The Motley Fool has an ironclad disclosure policy.


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Tim Beyers
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Tim Beyers first began writing for the Fool in 2003. Today, he's an analyst for Motley Fool Rule Breakers and Motley Fool Supernova. At Fool.com, he covers disruptive ideas in technology and entertainment, though you'll most often find him writing and talking about the business of comics. Find him online at timbeyers.me or send email to tbeyers@fool.com. For more insights, follow Tim on Google+ and Twitter.

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4/16/2014 3:59 PM
AMZN $323.68 Up +7.60 +2.40%
Amazon.com CAPS Rating: ***
COST $113.49 Up +1.43 +1.28%
Costco Wholesale CAPS Rating: *****
KR $44.32 Up +0.30 +0.68%
The Kroger Co. CAPS Rating: ***
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