Amazon Shifts Grocery Strategy

In a bid to solidify its competitive position in a market dominated by grocery giants, Amazon is planning to merge the fulfilment networks of its Whole Foods Market and Amazon Fresh Grocery. Amazon hopes to give customers the ability to do their errands in a one-stop shop, with the ultimate goal of building the scale of its grocery business.

In a series of experiments, Amazon has started shipping Whole Foods products from 26 of its Amazon Fresh fulfillment centres. It has also launched an experimental “Amazon Grocery” in the same building as its Chicago Whole Foods that offers different brands than a Whole Foods would normally carry. That way, customers can grab “grocery top-ups” like coffee and laundry detergent during their regular Whole Foods visits. Jessica Martin, a spokesperson for Amazon stated, “With this new concept, customers can shop their favorite natural and organic products at Whole Foods Market and get a broader product assortment from Amazon all in one trip, saving them time and money.”

As of late, Amazon has experienced challenges competing against the dominant traditional grocery retailers. According to data from the PYMNTS Intelligence report, as of Q2, Walmart captured a 20% share of consumer grocery spending, whereas Amazon only held 2.7%. Pivoting away from its previous programs like Just Walk Out cashierless checkout and drive-up grocery stores, this move will hopefully help expand Amazon’s reach in the US grocery market, estimated at about $1.5 trillion in annual sales.