Amazon’s online grocery sales bolstered by deal to buy Whole Foods
Amazon.com’s US$13.7 billion acquisition of Whole Foods is paying off in more ways than one: the e-commerce giant is seeing a surge in online grocery shopping for basic staples like canned beans and tomato paste.
Amazon immediately put about 2,000 items on its site from the Whole Foods 365 Everyday Value brand and sold out of almost all of the most-popular items, said Spencer Millerberg, chief executive officer of One Click Retail, which monitored sales.
Web sales of Whole Foods branded products totalled about US$500,000 in the first week, according to One Click Retail’s estimate. More impressive was the speed at which Amazon began selling Whole Foods products online. Such an integration would have taken several months in a brick-and-mortar chain, he said.
“It’s easy to implement and bring everything online with Amazon’s endless shelf,” Millerberg said. He said the question is whether Amazon can sustain the inventory, and use the stores to decrease delivery costs.
The findings show the buzz around Amazon’s purchase of the upscale food retailer stretched beyond its stores to its website. Customer traffic in Whole Foods brick-and-mortar locations gained 25 per cent during the first two days after Amazon’s takeover, according to Foursquare Labs Inc, which compared shoppers’ mobile location information before and after the acquisition.
The two reports suggest there is no cannibalisation between the two retailers, with one taking sales from the other. The combined company is likely to sell even more with the two brands working together than they would have collectively as separately companies.
“A lot of studies show that when you have a brick-and-mortar store, traffic to your website will also increase due to the visibility,” Millerberg said.
Amazon appeared unprepared for the rapid pace of sales. Of the top 100 selling Whole Foods items online, only 7 per cent remain in stock on Amazon’s website, according to One Click Retail.
Online grocery purchases have been slow to take hold because of consumers’ desire to touch and smell fresh produce before buying it. Only 4.5 per cent of shoppers frequently bought groceries online in 2016, said Kurt Jetta, CEO of TABS Analytics, a consumer products research firm.