Amazon's Grocery Sales Get a Lift -- WSJ
January 17 2018 - 3:02AM
Dow Jones News
By Heather Haddon
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (January 17, 2018).
Whole Foods' brand items like bacon, coconut water and frozen
blueberries helped Amazon.com Inc. gobble up more U.S. grocery
sales last year.
Products carrying the natural foods chain's brand helped push
sales at Amazon's online grocery-delivery service, AmazonFresh, up
35% to $135 million in the last four months of 2017 over the
previous four months, according to data analytics firm One Click
Retail. Amazon bought Whole Foods last summer.
Top selling items included organic baby spinach, shredded
Parmesan cheese, organic riced cauliflower, unsalted butter and
smokehouse bacon, the analysis found.
Amazon is building out its grocery delivery service to capture
more of an increasingly competitive market. Amazon sold an
estimated $11 million of Whole Foods' 365 Everyday Value natural
and organic products last year, small compared with the
private-label sales of its supermarket competitors. Kroger Co.'s.
natural and organic brands are nearing $2 billion in sales a year,
while Albertsons Cos. said this month that its organic line does $1
billion in annual sales.
But food analysts said Whole Foods products are helping
AmazonFresh compete with online grocery companies. "It...may be
bringing new people into AmazonFresh," said Jim Hertel, senior vice
president at food retail consultancy Inmar Willard Bishop
Analytics. "That would be a real positive."
Blair Reeves, a 36-year-old software product manager in
Manhattan, doesn't shop at Whole Foods stores but has regularly
bought the chain's 365 Everyday Value brand of products since they
began appearing on AmazonFresh. "They are the first choice whenever
you search for spaghetti or milk or butter," he said.
Online grocery sales account for less than 3% of the roughly
$800 billion grocery market. Analysts expect that share will grow
into the double digits in the next five years. Amazon sold nearly
$2 billion in groceries in the U.S. last year, according to One
Click, which analyzes patterns in e-commerce transactions.
Just $350 million of that was through the AmazonFresh service,
where shoppers tend to purchase perishable produce and meat,
according to One Click. The remainder was delivered through
Amazon's standard platform as well as its Pantry and superfast
Amazon Prime Now service, where shoppers tend to purchase bulky
foodstuffs like water, coffee and Soylent meal-replacement
drinks.
Amazon is selling Whole Foods products on those platforms too.
Rising grocery sales on Prime Now proves the worth of selling Whole
Foods products there, Morgan Stanley said in a recent report.
Jill Gifford, a 47-year-old stay-at-home mother in Renton,
Wash., has ordered Whole Foods salsa, taco shells and macaroni on
Prime Now. She said she might keep buying those products there
instead of driving to her local Whole Foods.
Whole Foods and Amazon spokeswomen declined to comment.
Write to Heather Haddon at heather.haddon@wsj.com
(END) Dow Jones Newswires
January 17, 2018 02:47 ET (07:47 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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