Amazon’s New Grocery Gains Show Shoppers See it Like Other Grocers

04/23/2018

Amazon’s grocery sales grew by nearly 50 percent in quarter one of 2018, and consumers are starting to see the ecommerce giant like any other grocery store, according to a new report from One Click Retail.

Amazon’s grocery sales saw an increase of more than $200 million during the period, recording a total $650 million, with particularly strong performance in coffee and cold beverages. What’s also interesting, however, is the inclusion of milk and cream as one of the fastest-growing subcategories: 152 percent year over year. With that subcategory joining such other household staples as shortening and oil, baking mixes, and salad dressings, perishables, once a typically avoided ecommerce sector, may now be seen as acceptable for online delivery – at least from the Seattle-based company.

“The growth of milk and cream signals a long-awaited shift in consumer behavior,” the report says. “Consumers are becoming less selective about what groceries they’re buying online and are beginning to treat Amazon just like any other grocery store.”

Breaking them down, Amazon’s top-selling U.S. categories in Q1 include:

• Coffee, with year-over-year sales gains of 44 percent, which earned more than $145 million during the period
• Cold beverages, with year-over-year sales gains of 40 percent, which earned more than $14 million during the period
• Snack foods, with year-over-year sales gains of 38 percent, which earned more than $79 million during the period
• Breakfast foods, with year-over-year sales gains of 26 percent, which earned more than $50 million during the period
• Coffee, with year-over-year sales gains of 46 percent, which earned more than $45 million during the period

Not doing as well is Amazon Prime Pantry, which saw year-over-year growth fall to 14 percent in Q1. The Prime-member-exclusive service, which packages everyday CPGs into a single box delivered for a flat fee of $6, recently was repurposed as a subscription service that costs $5 a month and exists separately from Prime. While its sales were estimated at $55 million last quarter – hardly insignificant – because it's growing much more slowly than the rest of grocery ecommerce, Amazon is trying to make the service more profitable for the company and more attractive to consumers.

This isn’t the first program adjustment for groceries that Amazon has made this year. In February, the ecommerce giant merged its Prime Now super-fast delivery service with Amazon Fresh, its grocery delivery service, two programs that delivered consumables but through very different models and fees. The move was intended to help possibly streamline delivery via Whole Foods, which launched earlier that month and has since expanded to Atlanta and the San Francisco and Los Angeles areas.