Consumer Nation

What's Behind the Rush Into the Low-Margin Grocery Business

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Americans spend more than $565 billion dollars a year on groceries. After all, everybody eats, everyday...and more than once.

Despite the high revenue, the profit margins traditionally have been low in this business, but that hasn't stopped retail giants and Wal-Mart Stores from escalating the national food fight. Both companies were in the news with big initiatives this week that reinforce the idea that their future plans include a focus on your weekly grocery list.

Over this week, Los Angeles was stealthily added as the second delivery area for Amazon's online grocery delivery service, Amazon Fresh. The online behemoth has been testing the program in and around its home city of Seattle for about six years. Reportedly, Amazon is looking to expand its online grocery business to San Francisco later this year, and then to 40 more areas in 2014. Amazon did not return CNBC's requests for comment and hasn't confirmed the reports of expansion.

(Read More: Amazon Plans Major Move Into Grocery Business)

"Historically, online grocery hasn't had a lot of success disrupting the traditional grocery market. But this is Amazon. It has the logistics and expertise in place, and if it can back it up with quality product, it's likely to make big waves," said Bob Summers, an analyst at Susquehanna.