Amazon has a long way to go in capturing American consumers’ grocery dollars - particularly with perishables such as seafood, new research said. However, its Whole Foods Market partnership is expected to help.
While 77 percent of Americans who shop online are Amazon customers, only 11 percent bought groceries during the past month, according to a new report from strategic advisory firm Brick Meets Click.
“If grocery is to fulfill its desired role, Amazon needs to get physically closer to customers and persuade them to buy highly-perishable products from them," Brick Meets Click partner David Bishop wrote in a blog post.
Even though Amazon has offered home delivery via AmazonFresh for several years, consumers don’t associate the Amazon brand with fresh foods, Bishop added.
As a result, Amazon generates an average of USD 45 (EUR 39) per online grocery order, compared to USD 116 (EUR 101) for supermarkets.
“Amazon trails supermarkets mainly because a majority of its orders rely on ship-to-home fulfillment, limiting what customers buy,” Bishop wrote.
However, increasing grocery orders could significantly strengthen Amazon’s sales - and its Prime memberships - worth an estimated USD 7 billion (EUR 6.1 billion) in revenue annually in the U.S. alone. Prime members are more likely (19 percent) to place grocery orders with Amazon than non-member customers (1 percent), “as there are a greater range of services that members can leverage as well as a broader assortment to buy,” Bishop wrote.
Amazon’s acquisition of Whole Foods Market is one avenue the retailer is taking to grow its grocery sales, and the retailer has likely increased sales of fresh seafood at Whole Foods with numerous promotions.
For example, during a September 2018 visit to a Chicago Whole Foods store, Prime members could take advantage of a special deal on sustainable wild caught swordfish steaks or save 10 percent on select items such as striped bass or rainbow trout, Bishop told SeafoodSource.
“Promoting products this way at Whole Foods allows Amazon to reinforce the value associated with being a Prime member,” he said.
Expanding its grocery offerings and platforms will help Amazon trigger new Prime member sign-ups, strengthen its bond with members, and drive additional sales, Bishop added.
This summer, Amazon also expanded grocery delivery from Whole Foods Market stores to 24 U.S. cities, including New York, New York; Long Island, New York; Fort Lauderdale, Florida; Miami, Florida; and Palm Beach, Florida. Prime Now members can receive "fresh produce, high quality meat and seafood, everyday staples and other locally sourced items" from Whole Foods in as little as one hour using the delivery service, Amazon said in a press release.
Amazon has since added additional cities available for Whole Foods delivery.
Amazon’s net sales surged 39 percent to USD 52.9 billion (EUR 46 billion) in the second quarter, thanks in part to Prime Day sales. Prime members saved millions of dollars at Whole Foods Market with Prime Day deals, which reportedly included a 10 percent discount on cod.
