Amazon launches online grocery store in Canada

Amazon is dipping its toe into Canada's already crowded grocery market as it starts offering groceries on its popular online store in an effort to compete with Wal-Mart and traditional grocery stores.

The online retail giant has launched a grocery and gourmet food section on its website, offering 15,000 dry food items, including packaged beverages, breakfast foods, pantry supplies and snacks.

The store features brands including Pepsi, Kellogg, Nestle and Campbell's soup, as well as baby food and a variety of natural and organic products.

The move by Amazon may push prices lower, according to Doug Stephens, retail consultant and co-founder of the Retail Prophet.

Amazon uses something it calls "dynamic pricing," which analyzes massive amounts of data to adjust prices in real time on certain items which allows the company to maintain a competitive edge over its competition.

"I think they're going to be extremely aggressive," Stephens told CBC News. "I think they will probably do to groceries what they did to books and digital media."

Stephens says the move into groceries is part of a long-term plan for Amazon.

"You can never look at an Amazon initiative and ask about its relevance today, because [CEO] Jeff Bezos is thinking so far into the future that I think most of us don't really have a concept of what's on his mind," Stephens said.

Long-term demographic bet

It may be a long-term demographic bet, Stephens says, based an aging population.

"There will come a day when the baby boomers simply can't drive to the grocery store," he added, and this will leave Amazon well-positioned to serve that market.

The company has also added office, toys and auto departments to its Canadian site in the past few months.

Competition has been heating up Canada's grocery market this year, with expansion by U.S. companies like Wal-Mart hitting sales growth and forcing Canadian companies like Metro to rethink their strategies.