Amazon Grocery Sales Grew by 50% in Q1 of 2018

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Amazon Grocery is firing on all cylinders according to their recent quarterly report and data collected from One Click Retail. The supermarket giants have been watching Amazon closely over the past few years, but it appears they should watch even closer. In just the first quarter of 2018, Amazon sold an estimated $650 million worth of online groceries. How will traditional grocery compete with Amazon’s rise in the market?

How is Amazon Grocery Growing?

Amazon’s online grocery sales increased by over 50% in the first quarter compared to Q1 in 2017. So how are they doing it? Beverages are currently the top selling items on Amazon. They make up nine of the top ten best-selling grocery products on the site. Coffee represents the most growth in the beverage category with 44% year-over-year sales growth. Cold packaged beverages also represented a large chunk of growth with 40% year-over-year sales. Cold drinks and coffee represented around $285 million of the $650 million in sales in Q1 for Amazon Grocery. Snacks were the next highest performer for Amazon as they had growth of 38% with over $70 million in sales.


How Will Whole Foods Play Into Amazon Grocery Efforts?

While Amazon Pantry and AmazonFresh growth have slowed, the acquisition of Whole Foods last year has everyone in the grocery industry on their heels. Amazon believes Whole Foods can help them get the full shopping basket with perishables like meat, milk, etc. that most consumers want to buy in a store. With Whole Foods and Amazon’s distribution centers, they are slowing rolling out same day shipping to customers around the U.S. A full rollout of this service will completely change the grocery game.

Walmart Will Not Go Down Without a Fight

The biggest challenger for slowing down Amazon Grocery growth is Walmart. They currently offer store pickup at all of their stores and plan to bring grocery delivery to over 100 markets in the U.S. by the end of 2018. Walmart is making it incredibly easy to shop online and then pick up in the store which meshes well with consumer shopping norms.

It will be quite intriguing to watch Walmart and Amazon duke it out over the future of grocery retail. How do you think traditional supermarket chains will compete with these e-retail giants?

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Costco Is Focusing on Its Online Store to Improve Revenues

Costco, an iconic membership-only warehouse club, is known for selling products for a lower price through scale. In fact, it is considered the top retailer of organic foods, prime meats, and wine in the world as it has branches in multiple countries like Japan, South Korea, Taiwan, Australia, Mexico, and the United Kingdom.

The company was the first to reach $3 billion in sales within six years. That remarkable growth has made them somewhat of a cult retailer. However, recently, the company delivered negative earnings of 1.7% in the first quarter of 2017, which means the company totally missed the expectations of Wall Street in terms of growth. Analysts have adjusted its earnings to $1.19 since it fell short of what was expected. Aside from the stock prices, the company only logged in a net sales of $27.47 billion last year, which fell short of the expected $28.38 billion.

Reasons for The Shortfall

Costco’s CFO Richard Galanti noted that the shortfall of revenue is attributed to low profits from gas sales and deflationary prices of their goods. The effects of volatile gas prices, as well as the foreign exchange rate, have affected the total revenue of the company. Costco is looking for other solutions to solve its financial setbacks. The company has recently switched from American Express to Citigroup Visa as its co-branded card since the latter credit card company offers lower merchant fees and higher rewards for their members.

Online Store to Boost Its Sales

Aside from changing its co-branding, Costco is also looking into improving its online retail store to improve the shopping experience for its customers. They are developing the marketing, search, return process, and tracking of orders. The store also considers increasing the number of depots by making them closer to customers so that they can deliver faster with less expense on shipping.

The company has also partnered with different delivery service companies like Google Express and Instacart particularly for customers located in the Bay Area so that they can get their purchases immediately.

While some critics say that the giant retail company might be shifting more towards online retail, the company still wants to encourage its consumers to go to their warehouse stores.  After all, they became well-known for their warehouse to begin with. The thing is that warehouse stores will never be replaced by online stores. In fact, Costco is just using the online platform to encourage people to visit its stores as the company noticed that loyal members bought less if they shop online compared to when they go to the actual store.

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