Amazon captures 18% of online grocery

Amazon Fresh truck
Amazon captured 18% of all online grocery sales in 2017, due in large part to its Whole Foods acquisition. (Image: Atomic Taco / CC BY-SA 2.0)

Amazon accounted for 18% of all U.S. online grocery orders in 2017. According to One Click Retail's annual report, Amazon brought in $2 billion for food and beverage sales, with cold beverages growing 65% year over year.

Other categories that topped the list of U.S. Amazon grocery research include snack food, breakfast food and candy and gum, proving that nonperishables continue to be very popular among Amazon grocery purchases. 

And with the recent acquisition of Whole Foods, Spencer Millerberg, CEO at One Click Retail, believes that grocery will inevitably have a major influence on Amazon's sales well into 2018 and beyond. 

"The impact has been felt primarily, but not exclusively, in the U.S. 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," he said.

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Was Millberberg surprised by the abundance of Amazon's grocery success in 2017?

"Yes and no," he told FierceRetail. "While Amazon Fresh has not accelerated quickly, that platform has been overshadowed by rapid expansion of Prime Now and the acquisition of Whole Foods."

Amazon Fresh sales more than doubled in 2017, climbing from $3 million in January to more than $7 million by the end of the year. The categories that few the most included dairy, fruit and vegetables. 

Organic groceries were also popular in 2017, with the word "organic" in 25% of also Amazon Fresh sales and included eight of the top 20 bestselling items. Specifically, the 365 Everyday Value brand, introduced by Whole Foods, was the No. 2 best selling brand among Amazon's private labels and has earned about $11 million since it launched in August. 

However, Amazon may still have some challenges to overcome. Millerberg says that international is going to be the biggest challenge for Amazon and one that will be difficult to win without an acquisition. 

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Looking forward, Millerberg believes that Walmart is the next retailer posited to make a big dent in online grocery, in the realm of buy online and pickup in store.

"With stores positioned within 30 minutes of more than 90% of the U.S. population, that massive reach and increasingly improved technology are positioned to win," he said.