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Amazon maintains lead in online grocery market share

Study: Supermarkets have opportunities to narrow the gap

Amazon continues to fortify its dominant position in online grocery retail.

Brick Meets Click’s May 2018 consumer survey found that Amazon captured 30% of U.S. online grocery spending. The study polled 4,855 adults who do grocery shopping for the household.

The Barrington, Ill.-based strategic advisory firm, which focuses on the grocery sector, noted that no other company comes close to Amazon’s share in online grocery. In fact, the overall supermarket channel accounted for 30% of online grocery sales over the period — the same as Amazon, according to the survey.

Next in online grocery sales share were mass merchants (13%), online delivery platforms (11%), warehouse clubs (6%) and meal kit providers (4%), Brick Meets Click reported. Other online grocery participants represented about 7% of sales.

The study covered sales in the grocery (food and nonfood), alcohol, bakery, dairy, deli, frozen, general merchandise, health and beauty aids, meat, seafood and produce categories. Sales via third-party providers like Instacart and Shipt were included in their respective channels based on the retailer used by the consumer.

Amazon has achieved its online grocery leadership by transforming how households shop for groceries, Brick Meets Click said. This has come through such services as Subscribe & Save, AmazonFresh, Prime Pantry and Prime Now as well as acquisitions like Whole Foods Market and Quidsi.

Still, there are clear opportunities for supermarkets to grow their online grocery market share versus Amazon, according to Brick Meets Click partner David Bishop (left).

For example, supermarkets outperform Amazon in purchase frequency and sales per order, Brick Meets Click research revealed. Of the 77% of online households that buy products or services from Amazon, just 11% purchased groceries from the e-tail giant during the past 30 days.

Similarly, households buying groceries online from supermarkets do so from those retailers more than twice monthly, compared with 1.7 times for Amazon.  

“Until recently, Amazon’s success relied heavily on leveraging its ability to overcome the physical constraints that the limit the reach and the breadth of assortment brick-and-mortar retailers can offer,” said Bishop (left).

Brick Meets Click’s study also found that the average grocery order for Amazon customers was $45, well behind customers’ average online grocery spend of $116 at supermarkets and $143 at online delivery platforms like FreshDirect and Peapod.

Supermarkets can leverage their brick-and-mortar locations and strengths in online grocery shopping frequency and ticket size to protect their customer base from Amazon, generate more online trips and highlight the value of the in-store shopping experience, Bishop pointed out.

“To grow grocery market share, Amazon needs to strengthen its physical presence and persuade consumers to buy highly perishable products from it,” he added. “Whole Foods’ connection to Prime Now and exclusive Prime membership benefits will help to varying degrees, but more moves are clearly needed.”

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