Amazon accounted for circa 18% of online food and beverages sales this year, according to a report by market research firm Packaged Facts.
Amazon’s share is double the 9% held by Walmart who is positioned in second place in the e-tail grocery market. Amazon made a leap into the supermarket industry last summer with its $13.7bn acquisition of Whole Foods.
Despite its dominance in online shopping, Amazon faces struggles to sell fresh foods online, with the AmazonFresh service accounting for less than 5% of sales from online-online grocers.
Therefore, the report suggests that retailers shouldn’t try to “out-Amazon Amazon” but, rather, should focus on fresh food offerings.
The report outlines that four of Amazon’s competitors – Walmart, Instacart, Peapod, FreshDirect – have already begun to capitalise on Amazon’s new entry to the perishable grocery sector.
For instance, the immediate threat to brick-and-mortar retailers by Amazon has incentivised retailers to develop online sales, to the benefit of delivery service Instacart.
Meanwhile, Walmart is using its vast network of stores to offer pickup of groceries select Walmart locations for groceries ordered online.
Using existing stores for infrastructure is also a strategy adopted by Peapod, whereas Freshdirect has developed its distribution and delivery of perishable goods in the New York
The firm also predicts that online grocery gains will accelerate in the coming years and that the market will be worth nearly US$42bn in 2022 – more than triple its current value.
“At this stage, it is too early to determine what percentage of overall food and beverage sales will eventually be made online, but it is not unreasonable to assume a 20–30% market share by the time the market reaches equilibrium over the next decade,” said David Sprinkle, Research Director for Packaged Facts.