By RDBA Executive Director Annette Maggi, MS, RDN, LD, FAND
Today, 45 percent of online sales are through Amazon; 58 percent of shoppers start their product searches on Amazon compared to 20 percent through search engines and 18 percent on retailer websites. When they shook the industry by purchasing Whole Foods, all grocers took notice. In a webinar presented by Brad Bane and Alexander Rink from Market Track, discussion surrounded the idea of how retailers can co-exist with Amazon, given their dominance in the marketplace.
In reviewing shopper patterns through Amazon, brick and mortar retailers are well positioned for now. According to Market Track data presented in the webinar, Amazon has just 0.3% of the grocery market and for key grocery categories, most shoppers prefer to purchase them in store. For example, 94% or more consumers indicate they prefer to shop in-store for all of the following categories: fresh meat, dairy, frozen meat, frozen produce, deli items, produce, and bread/bakery. While Amazon started in books, their top five categories of sales are computers, electronics, housewares, entertainment, and hardware. These categories are a long way from food.
While their purchase of Whole Foods suggests strong movement into grocery for Amazon, it also creates channel conflict within their own company. With recent price slashing, some products are now less expense in-store than online, which may shift loyal shopper purchasing away from their e-commerce entity.
Strategies for grocery retailer co-existence with Amazon suggested by webinar presenters included:
Even Amazon has challenges in their business, and grocery retailers have a multitude of opportunities to drive business and co-existence with this retail giant.