Groceries are fueling growth at Amazon

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Groceries are fueling growth at Amazon

By Gina Acosta - 01/16/2018

Amazon's push into the grocery business has led to a big boost in online grocery sales for the e-comm giant.

One Click Retail's Amazon Grocery 2017 Review report reveals that Amazon that attained an estimated $2 billion in food and beverage sales, a market share of 18% of online grocery sales in the U.S.

According to One Click, the company was able to boost its online grocery sales by 59% year-over-year in the U.S. Furthermore, Amazon also saw its grocery sales pop 56% in the UK and 54% in Germany.

AmazonFresh accounted for $350 million in sales, while Whole Foods 365 Everyday Value products led to $11 million in revenues. In the last four months of 2017, AmazonFresh sales hit $135 million, which marked a 35% climb from the previous four-month period.  

The e-commerce research firm found that Amazon's U.S. cold beverage sales-driven by bottled water and energy drinks-surged 65% from the year-ago period and accounted for $350 million in sales. The other top-selling categories were Coffee, Snack Food, Breakfast Foods, and Candy & Gum. This highlights that, at least for now, shoppers have leaned towards purchasing non-perishable items on Amazon.

According to the report, the key factors driving growth rates higher than 50% in Amazon's three biggest markets (the US, UK and Germany) include:

  • Amazon's penetration is at an all-time high in both North Americaand Europe and it is increasingly valued by young professionals, busy with their careers and/or raising young families, as a one-stop-shop for their online shopping, including groceries.
  • Sign-ups for Prime membership, which includes access to Amazon's Prime Pantry grocery items, were taking place in record numbers during the 2017 holiday season.
  • Amazon Fresh continues to be available to more zip codes throughout the US, UK, Germany, Japan, and soon Australia.

"The biggest growth driver of late 2017, which will inevitably have a major influence on sales well into 2018 and beyond, is Amazon's acquisition of Whole Foods," said Spencer Millerberg, CEO at One Click Retail. "The impact has been felt primarily, but not exclusively, in the US. Customer traffic in Whole Foods locations spiked by 25% in the first two days after the acquisition, and Amazon Fresh also experienced a strong increase in sales after the announcement, even before any new products were released on Amazon.com."

According to the report, weekly sales of Amazon Fresh more than doubled over the course of the year, climbing from approximately $3 million in January to over $7 million by the end of 2017 to reach an estimated $350 million in total sales. Dairy drew the highest sales by value, estimated at $85 million, while most of the top Fresh items were fruit and vegetables. "Organic" proved to be a key search term, with roughly 25% of all Amazon Fresh sales going to items which had the word "organic" in the title, including eight of the top 20 bestselling items of 2017.

OneClick Retail's report findings also reveal that 365 Everyday Value consistently sold as the #2 bestselling brand among Amazon's private labels (second only to AmazonBasics) since its launch in late August, earning an estimated $11M in sales by the end of 2017.

"The Amazon and Whole Foods partnership is a perfect match, doubling down on the campaign begun by Amazon Fresh to change consumer perceptions of online grocery sales from 'non-perishables only' to high quality, fresh, 'whole'-some foods," said Nathan Rigby, VP at One Click Retail. "For brands, this will have – and already has had – widespread implications, with food sales moving online in record volumes as consumer confidence soars. The growth potential for online sales of groceries in 2018, and fresh foods in particular, is huge. In all likelihood, this is the tipping point we have been waiting for."

To read One Click Retail's Amazon Grocery 2017 Review report, visit: http://oneclickretail.com/amazon-grocery-2017-review/