1. Channel: Ecommerce & Digital

Why Amazon Can’t Be Counted Out Of The Grocery Wars

The Wall Street Journal this morning starts with this basic observation:

“Amazon.com hasn’t taken over your refrigerator yet. But the size and importance of the grocery market is precisely what compels the Everything Store to keep trying.”

The meat of the story:

As it has developed its approach to physical grocery stores, it has focused on “whiz-bang” features – the checkout-free Amazon Go stores, Dash Carts that “let shoppers scan and pay for items as they put them in their carts,” and most recently, “Amazon One, which allows shoppers to pay with a scan of their palm.”  Plus, it owns Whole Foods, which it bought in 2017 for $13.1 billion.

However, the Journal writes, “Amazon has barely scratched the surface. The company that now generates nearly $525 billion in annual revenue has just over a 3% share of the U.S. grocery market between its branded stores and Whole Foods, according to the latest data from Numerator. Walmart—one of only two other public companies on the planet generating more annual revenue than Amazon—has a 30% share, including Sam’s Club, while grocery giant Kroger sits at 11%.”  While it used to dominate the online grocery business with a 21% market share, the story points out, “grocery competitors are encroaching on Amazon’s digital turf. Walmart surpassed Amazon’s market share (including Whole Foods online delivery) in online grocery sales in 2020 and eMarketer expects it to keep its number one position this year and next. Soon-to-be-public Instacart also is gaining ground, having surpassed Amazon’s online grocery market share in 2021, according to eMarketer.”

And then, this conclusion:

“Don’t count Amazon out … The company has a long history of solving the thorny problems of getting consumers and their stuff in close proximity. It also has a new boss with a powerful motivation to rejuvenate the company’s sales growth, plus an estimated 167 million members of its Prime shipping service in the U.S. alone, according to Consumer Intelligence Research Partners, who are already inclined to concentrate their spending on the company’s offerings.”

KC’S View:

While the Journal didn’t make this point, I think it accidentally hit the nail on the head – Amazon’s physical grocery stores have been all about “whiz-bang,” as opposed to having a clear sense of the unique customer problem/need/desire that they’re designed to solve.

And, the Journal accidentally also points to another opportunity – the 167 million Prime members who have never been seen or used as the connective tissue among all Amazon’s efforts.  I’m not talking about using them in an exploitive way, but rather understanding that using technology to connect problems/needs/desires expressed via one’s online shopping habits to the problems/needs/desires reflected in a bricks-and-mortar shopping trip should manifest itself in enormous opportunity.  Despite all its capability and day-one mindset, Amazon never really has done that – even though this should be the secret sauce that differentiates its offerings.

The post Why Amazon Can’t Be Counted Out Of The Grocery Wars appeared first on MNB.

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