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E-commerce is still underrepresented in food sales, but Amazon’s American and European 2017 growth was impressive. Are we close to a tipping point?
One stop shop
In the American market, Amazon has obtained an 18 % market share for online food sales in 2017, reaching two billion dollars (+ 59%). That easily puts it in the number one spot, twice as large as Walmart, which comes in second. The company is also doing very well in Europe: there was a 56 % online food sales increase in Great Britain, to 150 million pound, and a 54 % increase to 200 million euro in Germany. The figures, which only refer to the chain’s own sales and feature no contribution from its marketplace, come from analyst One Click Retail.
The analyst expects the growth this year will be even higher and points to different factors that will play into the retailer’s hand. Amazon’s market penetration continues to soar: busy professionals and young families appreciate the fact that they can go to a single “one stop shop” for their purchases, including food. A record number of shoppers have signed up for the Prime membership, which also grants access to the Amazon Pantry food store, during the holiday period. Amazon Fresh is also reaching an increasing number of regions in the United States and the United Kingdom, but it is also heading to new pastures, like Germany, Japan and soon Australia.
Success of Whole Foods
Its Whole Foods acquisition is its main growth engine: the store chain welcomed an additional 25 % in customers since its purchase, but Amazon Fresh also took full advantage of the new addition to the Amazon family. Its growth could have been even sturdier if Amazon knew how to value the popularity of Whole Foods’ 365 Everyday Value brand better. In the first week of online availability in Amazon’s web shop, 90 % of its products sold out. 365 is now Amazon’s second best-selling private label, following Amazon Basics. According to the analyst, the Whole Foods partnership is a perfect match and in the consumer’s mind, the online world is an increasingly attractive location to buy healthy, fresh food.
Cold and hot drinks are Amazon’s best-selling food categories in the United States, followed by snacks, cereals and candy. When it comes to fresh products, dairy is first, followed by meat, frozen products, vegetables and fruit. Bananas are the best-selling product in itself. A remarkable fact is that 25 % of Amazon Fresh’ sales include “organic” in the description. In Europe, beer, wine and alcohol are ranked first, with a 96 % growth in the UK and 230 % in Germany. In the latter, baby products also perform well.
If food sales continue to shift online at the same pace, this will have major implications for all name brands according to One Click Retail. It seems like the tipping point is rapidly coming closer.
