Amazon grocery shopping fell in 2018: survey

In this article:
A Whole Foods shopper prepares a delivery order. REUTERS/Lisa Baertlein
A Whole Foods shopper prepares a delivery order. REUTERS/Lisa Baertlein

Amazon is dominant in so many product categories but is still trying to figure out how to dominate the grocery market.

More than 50% of American households have a Prime membership. But the number of Prime members who shopped for groceries online at least once a month in 2018 fell to 12%, compared to 17% in 2017, according to a consumer survey by UBS. In 2014, 10% of UBS’s survey respondents said they shopped for groceries online.

This decline in grocery shopping frequency is surprising, the UBS analysts say, because of the Seattle retailer’s ongoing investments in this category through Whole Foods and Prime Now. Amazon bought Whole Foods in 2017 for $13.7 billion and offers its grocery products online combined with in-store promotions.

One reason for the decline: Amazon is still in the early stages of selling Whole Foods products and integrating in-store promotions with Prime offerings, according to UBS.

The report highlights “a healthy Prime ecosystem in the U.S. with high penetration, steady growth of adoption from new subscribers and stable to growing usage trends from existing subscribers.”

But grocery is tailing behind. An October report from grocery advisory firm Brick Meets Click found that the average grocery order for customers buying from Amazon is $45 – much lower than what customers spend online at big supermarkets ($116) or even other online platforms like Fresh Direct and Peapod ($143).

As overall Amazon Prime renewals start to show signs of saturation, UBS analysts say online grocery shopping is key to subscription growth: 92% of Prime members indicated they are “somewhat or extremely” likely to renew their subscriptions, a slight decline from 95% in 2017, the survey found.

UBS highlighted four Amazon offerings they believe add value for consumers’ Prime membership: Amazon Prime Now offers free delivery in two hours or delivery in one hour for $7.99 for grocery and other products; Prime Music provides Amazon Music Unlimited for $7.99 a month for Prime members and $9.99 per month for non-members; other features and services include Amazon Prime Instant Movies and Amazon Prime Instant TV Shows.

Overall, UBS expects that Amazon Prime’s trend of solid growth over the past few years will persist and that by 2022, 80% of Amazon customers will be Prime subscribers. The international market will be a key part of that growth as Amazon continues to push into India and other key markets.

Sibile Marcellus is an on-air reporter for Yahoo Finance.

Read more:

Smart devices spark privacy concerns among consumers: study

Netflix, Disney, and other media giants will battle over streaming in 2019

Advertisement