Amazon’s purchase of Austin-based Whole Foods Market last year is already bolstering the online retailer’s sale of groceries, according to a new report.
Sales of Whole Foods’ store brand, called 365 Everyday Value, helped sales on Amazon’s line of consumables grow by 35 percent year-over-year in 2017, according to e-commerce analytics firm One Click Retail. In total, Amazon sold $2 billion worth of groceries online last year in the United States, with roughly $11 million coming from the 365 brand.
“Perhaps 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,” One Click Retail’s report said. “The grocery space is undergoing a major disruption.”
Amazon announced on June 16 that it would acquire Whole Foods in an all-cash deal valued at $13.7 billion.
The sale to Amazon was a surprise even though it followed months of rumors of other suitors, such as Albertson's, and efforts by an investment group to force Whole Foods to make management and operational changes to address increased competition.
Born in 1978 with a single store on Lamar Boulevard in Austin, Whole Foods became an iconic Austin business and success story, growing to more than 460 stores and 87,000 employees.
Sales from Amazon’s grocery division, named AmazonFresh, accounted for $350 million of Amazon’s total online grocery sales last year, One Click reported, with weekly sales of Fresh expanding from $3 million in January to more than $7 million by December, roughly four months after Amazon’s purchase of Whole Foods.
Other grocery sales on Amazon came from the company’s main website, as well as its Prime Pantry and Prime Now services, which also carry Whole Foods products.
In 2017, Amazon grew its online share of grocery sales to 18 percent, One Click said, double that of its closest competitor, Walmart. Amazon’s top-selling grocery items included cold beverages, coffee and snack items.
But Amazon’s online sales make up only a tiny piece of the overall grocery market. Online grocery sales are still only estimated to make up about 3 percent to 4 percent of the $800 billion grocery industry, and not everything within Amazon’s grocery line is growing. In November, Amazon scaled back Fresh in at least seven states after the service reportedly did not grow as fast as Amazon anticipated.
Still, analysts are predicting online sales of grocery items will continue surging. Market research firm Statista, for example, predicts that online grocery sales will comprise about 10 percent of the grocery market by 2020.
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