Online retail giant Amazon is slowly gaining ground in the grocery market.
In 2017, the company secured an 18% market share in online grocery sales in the US, double the share held by its closest competitor Walmart, according to data from One Click Retail.
The e-commerce analytics firm estimates that Amazon generated sales of $2 billion in this area last year, driven by the expansion of its Amazon Fresh service, and its $13.7 billion acquisition of Whole Foods.
But it's not just the US where the online retailer has been expanding its food business. Total grocery sales in the UK last year were estimated at £150 million, representing growth of 56% year-on-year, while sales in Germany were around €200 million, up 54%.
Online Market
Grocery is the retail area that has been the slowest to adopt e-commerce models, but One Click Retail anticipates that Amazon will continue to see growth in this sector in 2018.
The group attributes this to Amazon's penetration, which is at an all-time high in both North America and Europe, with consumers increasingly viewing it as a one-stop-shop, as well as the continued expansion of Amazon Fresh to more regions in the US, UK, Germany, Japan, and soon Australia.
The e-commerce company's entry into the bricks-and-mortar retail space last year has also added to its online business.
Although customer traffic in Whole Foods locations spiked by 25% following the acquisition, Amazon Fresh also experienced a strong increase in sales during this period, with the addition of Whole Foods' 365 Everyday Value range to its online offering.
In terms of what consumers are buying online, non-perishable items continue to dominate Amazon's grocery sales. Cold beverages sell better than any other category, with estimated sales of $350 million in the US last year, followed by coffee products, driven by disposable coffee pods. Other top-selling categories include snack foods, breakfast foods, and candy and gum.
Shoppers have been less likely to purchase fresh grocery products from Amazon, however, 2018 could be the year that changes.
Private Label
Amazon also had its most successful year yet in terms of private-label sales, according One Click Retail, which estimates that Amazon generated sales of almost $450 million from its own brands in 2017, including Amazon Basics, Pinzon, Amazon Elements, Happy Belly, and Whole Foods’ 365 Everyday Value food range.
“[The year] 2017 was a game-changing year for Amazon private brands,” said Spencer Millerberg, managing partner at One Click Retail.
“They’ve been experimenting with private brands for years, and now, finally, Amazon has refined their strategy, leveraged their brand, and launched over 30 new brand names in highly competitive categories.”
In October, Amazon reported that net sales increased by 34%, to $43.7 billion, in the third quarter of its financial year.
This figure includes $1.3 billion in sales from Whole Foods Market, which Amazon acquired in August. The partnership deal has helped to fuel growth in Amazon's grocery business, while it continues to develop its checkout-free supermarket concept Amazon Go.
The company is set to release its results for the fourth quarter of 2017 on 1 February.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Sarah Harford. Click subscribe to sign up to ESM: The European Supermarket Magazine.
