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01/16/2018

Amazon accounted for 18% of U.S. online grocery sales in 2017

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A new report reveals Amazon’s growing impact in the online grocery market.

Amazon attained an estimated $2 billion in food and beverage sales, with a market share of 18% of online grocery sales in the United States, according to One Click Retail’s Amazon Grocery 2017 Review. One Click Retail found that U.S. Amazon sales of cold beverages and coffee earned more than double the next leading categories, with cold beverages growing 65% year-over-year. The remaining top categories — snack food, breakfast foods and candy and gum — demonstrate that non-perishables continue to dominate Amazon's grocery sales.

According to the report, the key factors driving growth rates higher than 50% in Amazon's three biggest markets (the United States, United Kingdom and Germany) include:

• Amazon's penetration is at an all-time high in both North America and Europe and it is increasingly valued by young professionals — busy with their careers and/or raising young families — as a one-stop shop for their online shopping, including groceries.

• Sign-ups for Prime memberships, which includes access to Amazon's Prime Pantry grocery items, were taking place in record numbers during the 2017 holiday season.

• Amazon Fresh continues to be available to more ZIP codes throughout the United States, United Kingdom, Germany, Japan and soon Australia.

According to the report, weekly sales of Amazon Fresh more than doubled over the course of the year, climbing from approximately $3 million in January to more than $7 million by the end of 2017 to reach an estimated $350 million in total sales. Dairy grew the highest sales by value, estimated at $85 million, while most of the top Fresh items were fruit and vegetables. "Organic" proved to be a key search term, with roughly 25% of all Amazon Fresh sales going to items which had the word "organic" in the title, including eight of the top 20 bestselling items of 2017.

“The biggest growth driver of late 2017, which will inevitably have a major influence on sales well into 2018 and beyond, is Amazon's acquisition of Whole Foods," said Spencer Millerberg, CEO at One Click Retail. "The impact has been felt primarily, but not exclusively, in the United States. Customer traffic in Whole Foods locations spiked by 25% in the first two days after the acquisition, and Amazon Fresh also experienced a strong increase in sales after the announcement, even before any new products were released on Amazon.com."

One Click Retail's report findings also reveal that Whole Foods’ 365 Everyday Value consistently sold as the No. 2 bestselling brand among Amazon's private labels (second only to AmazonBasics) since its launch in late August, earning an estimated $11 million in sales by the end of 2017.

“The Amazon and Whole Foods partnership is a perfect match, doubling down on the campaign begun by Amazon Fresh to change consumer perceptions of online grocery sales from 'non-perishables only' to high quality, fresh, 'whole'-some foods," said Nathan Rigby, VP at One Click Retail. "For brands, this will have — and already has had — widespread implications, with food sales moving online in record volumes as consumer confidence soars. The growth potential for online sales of groceries in 2018, and fresh foods in particular, is huge. In all likelihood, this is the tipping point we have been waiting for."