Amazon’s Grocery Business is Still a Work in Progress

Amazon committed to grocery sales long ago, as it sought to capture its share of that huge retail market and huge proportion of retail shopping trips. This is a fresh look at how it is going.

Last week Amazon announced another effort to encourage grocery shopping. The new program offers unlimited grocery delivery, covering thousands of US cities and towns, for $9.99 per month. This follows many other grocery market strategies, including the acquisition of Whole Foods, the launch and repeated tweaking of Amazon Fresh physical stores, and a range of delivery prices and subscription inclusions and exclusions.

To assess Amazon’s success, we analyze how they have penetrated their customer base to sell groceries. Amazon has steadily improved its reach, with over one-third of US Amazon customers buying groceries in their most recent Amazon.com order.

35% of Amazon.com customers report buying groceries in their most recent order, in the twelve-month period ending with the March 2024 quarter (Chart 1). This represents the continuation of a steady increase in penetration over the last five years.