Alexandria, Virginia – Amazon has invested in its multi-service grocery business, including Prime Now, Fresh, Go and others, plus it bought $13.7 billion in Whole Foods, which was more than 10 times what Amazon had paid. any prior dealings. As of mid-December, amazon.com and whole foods accounted for a combined 2.4% of the grocery market over the past 12 months, cnbc reports.
For comparison, Walmart controlled 18% of the grocery market, according to the research firm’s numerator. cnbc reports that amazon’s delivery services have struggled to stand out in a crowded field, while automated convenience stores have lost priority.
Sales at Whole Foods and Amazon Fresh stores were lower in 2021 than in 2018, despite Amazon increasing its leases by 17% over the period. Amazon’s grocery business has become “an expensive hobby,” Jake Dollarhide, CEO of Longbow Asset Management, told CNBC.
The grocery market is increasingly competitive, with industry leaders like Albertsons, Kroger and Target stepping up their digital offerings game, while Doordash, Gopuff, Instacart and Uber are capitalizing on fast delivery, which is Amazon territory.
After a prolonged demise of the Amazon Prime Now app, filled with competition within the company and a new leader taking the helm, Amazon has moved all online grocery ordering to fresh or whole foods.
Amazon bought Whole Foods in 2017 and represented a way for Amazon to combine the best of e-commerce and in-person shopping, but Amazon faced significant integration and cultural challenges, according to cnbc.
prime was now brought to whole food stores, but amazon realized that existing store layouts made it difficult to pick and process orders efficiently, so instead of using whole foods, amazon explored creating a new supermarket chain that combined the lessons of whole foods. With Amazon’s logistics expertise, real estate footprint, and Prime Now warehouses, which placed limited inventory close to customers. enter amazon fresh.
Amazon Fresh opened its first store in 2020 in the upscale Woodland Hills neighborhood of Los Angeles, and there are now more than 20 in six states and Washington, D.C. the stores are more efficient at online ordering than rival supermarkets and can fulfill an average of 120 to 150 online orders a day. Jordan Berke, CEO of Tomorrow Retail Consulting, told CNBC that Amazon’s Fresh Stores are capable of handling three to five times the order volume at launch.
Consumers appear to be doing well: Traffic at eight fresh stores held steady between March, around the time they opened, and September, according to a report published in October by retail analytics firm placer.ai.
“the relative stability in visits shows that a core group of customers have added a trip to amazon fresh to their usual grocery shopping routine, indicating that amazon fresh has been successfully integrated into the grocery mix of the neighborhoods it entered,” the company wrote. .
Amazon Go stores, however, are not seeing the growth that Amazon originally planned. Four years after opening Amazon’s first store, there are only 24 stores, far short of the 3,000 the company was aiming to open by 2021, according to a report from Bloomberg after the initial launch. Because many of Go’s locations are in dense urban areas, catering to busy office workers during their lunch breaks, the pandemic has brought much of the foot traffic to the stores to a standstill.
Although Amazon plans to open Go stores in the suburbs, former Amazon employees told CNBC that the overall grocery strategy has moved more toward larger stores and away from Go marts.
Last month, Business Insider reported that Amazon had considered selling gasoline at Go convenience stores, along with lottery tickets and pharmaceuticals. the company reportedly acknowledged that selling fuel could bring risks, including potential conflict with its various climate initiatives.