By the start of the summer, Amazon had captured almost one-third (30 percent) of online grocery spending in the United States, according to new research from Barrington, Ill.-based retail consultancy Brick Meets Click.
According to the supermarket research, which is based on a consumer survey of 4,855 grocery shoppers age 18 and above, no other company even comes close to Amazon's dominant position relative to online grocery retail – when aggregated, the supermarket channel captures roughly an equivalent market share.
How has Amazon captured this leadership position? By transforming how households shop for groceries over time through the launch of such services as Subscribe & Save, Amazon Fresh, Prime Pantry, and Prime Now. Acquisitions of such companies as Quidsi and Whole Foods have also helped.
Even with its dominance, however, Amazon still has room to improve in the grocery ecommerce game. If it wants to grow, or even just maintain, its market share, it has to address a number of realities, including the following:
- While 77 percent of the households that are online buy products or services from Amazon, only 11 percent have purchased groceries from it during the past 30 days
- Households that buy groceries online from supermarkets turn to those retailers more than two times per month, compared with 1.7 times for Amazon
- The average grocery order for customers buying from Amazon is $45, which significantly trails what customers spend online at supermarkets ($116) or even such online grocers as FreshDirect and Peapod ($143).
"Until recently, Amazon’s success relied heavily on leveraging its ability to overcome the physical constraints that limit the reach and the breadth of assortment brick-and-mortar retailers can offer," said David Bishop, partner at Brick Meets Click. "To grow grocery market share, Amazon needs to strengthen its physical presence and persuade consumers to buy highly perishable products from it. Whole Foods' connection to Prime Now and exclusive Prime membership benefits will help to varying degrees, but more moves are clearly needed."
Supermarkets aren't without their own advantages over Amazon, though: They currently outperform the Seattle-based ecommerce giant in both purchase frequency and sales per order, according to the grocery research. To protect their shopper base and attract more online trips, supermarkets will likely leverage these strengths, plus their physical locations, to make online grocery shopping even easier while reinforcing the value of the in-store shopping experience.
Amazon has more than 575,000 employees worldwide. Under its Whole Foods Market banner, the company is No. 8 on Progressive Grocer’s 2018 Super 50 list of the top grocers in the United States.