Walmart aiming to overtake Amazon in online grocery sales

Amazon remains the largest player in sales of online groceries in the United States, but some experts are predicting Walmart will grab a much larger share of the market in the near future and may even surpass Amazon in coming years. 

Walmart has been experiencing much larger sales volumes through its online channels in the past year. With its 2016 purchase of and evidence its e-commerce channels are picking up momentum - sales spiked 50 percent in its fiscal third quarter - Walmart is “best positioned” to take both mind share and market share in the online grocery market now and into the future, according to Deutsche Bank Analyst Paul Trussell.

Trussell believes Walmart might eventually match Amazon’s online grocery sales. Last year, Walmart had 11 percent of the U.S. online grocery market, he said in a research note, according to CNBC. Trussell predicted Walmart’s market share will rise to 17 percent, versus Amazon's 19 percent, in 2025.

"We believe [Walmart] has positive momentum with robust underlying trends in the core business, and an expanding online platform (including both and that positions the company as a legitimate contender against [Amazon] in the long-term," Trussell wrote.

However, Amazon remains the dominant online grocer, capturing nearly 30 percent of online grocery market in the United States, David Bishop, a partner at strategic advisory firm Brick Meets Click, told SeafoodSource.

“Mass merchants like Walmart have made significant strides with their respective e-commerce platforms in terms of making them accessible to more households and an acceptable shopping alternative; however, it’ll take time to catch up to or even surpass Amazon,” Bishop said.

In fact, Amazon accounts for 49.1 percent of all e-commerce spending in the United States and 4.9 percent of all retail spending (online and offline), according to eMarketer.

Amazon entered online grocery retailing much earlier than most physical grocery retailers, launching both Subscribe & Save and AmazonFresh in 2007, Bishop noted. And it evolved quickly in the space with PrimePantry and PrimeNow, which Amazon has effectively integrated into its brick-and-mortar Whole Foods Markets, he said.

Still, Amazon’s dominance in online grocery is centered on packaged and shelf stable food products, as well as in nonfood items, general merchandise, and health and beauty care, according to Bishop. Amazon has a long way to go in capturing American consumers’ grocery dollars, he said. While 77 percent of Americans who shop online are Amazon customers, only 11 percent bought groceries during the past month, according to a recent Brick Meets Click report.

“Selling perishable products online is really challenging to penetrate if your brand isn’t associated with ‘fresh’ in some way. It’s also more complex and costly if fulfillment depends on a ship-to-home method, such as two-day shipping,” Bishop said. “If [Amazon] is to fulfill its desired role, [it] needs to get physically closer to customers and persuade them to buy highly-perishable products from them."

Walmart and other brick-and-mortar chains have an advantage in operating physical stores in close proximity to customers, so they will continue to capture a larger share of the online grocery market, according to Bishop.

Walmart’s positioning will also be helped by newly unveiled plans for a high-tech grocery distribution center in Shafter, California. The facility, set to open in the fall of 2020, will move 40 percent more fresh and frozen groceries than Walmart’s typical distribution center.

Walmart also said this spring that it is partnering with Postmates to expand the retailer’s popular Online Grocery Delivery option to more than 40 percent of U.S. households. 

Plus, it is adding 500 additional Pickup Towers to stores across the country, bringing its total to more than 700 by the end of the year. With this expansion, Pickup Towers will be available to nearly 40 percent of the U.S. population, according to Walmart.

Photo courtesy of Walmart


Want seafood news sent to your inbox?

You may unsubscribe from our mailing list at any time. Diversified Communications | 121 Free Street, Portland, ME 04101 | +1 207-842-5500