The Amazon Grocery Shopping Basket
A couple of weeks ago we looked at the classic shopping basket concept as it applies to Amazon. We concluded that the differences between physical trips to a store and online ordering, especially with virtually free delivery, renders the traditional retail shopping basket metric far less relevant to Amazon. Really, we found Amazon looks more like a convenience store than a classic retailer, as customers make many smaller, more frequent purchases.
Yet, Amazon continues to pursue the grocery business, which by definition makes the shopping basket analysis relevant. After all, the very idea of a shopping basket draws from grocers, who literally want to understand the mix of products customers put in their actual basket or cart. These grocers seek to increase the number and diversity of those products and maximize the impact of those consumer trips to the supermarket.
We need to focus the Amazon shopping basket analysis on grocery purchasers, then. Grocery remains the single largest category for Amazon customers, with one-third of shoppers including groceries in their most recent order. These shoppers do behave a little more like typical grocery customers, but not by much.
We are combining Amazon Fresh orders, which we estimate to be about 2% of all Amazon orders, and traditional Amazon orders, which also can and do include (non-perishable) grocery items. Of course, Amazon Fresh orders should be much more similar to true in-person grocery store shopping, or Instacart or other online grocery ordering. And that 2% number should not fool us into believing that Amazon is not a significant player in fresh grocery delivery. After all, 2% of Amazon’s billions of orders is a lot of grocery shopping.
Amazon orders that include groceries have more items than those that do not. 20% of customers that included grocery in an order bought five or more items, compared to only 7% for customers that did not include grocery (Chart 1). By contrast, one-quarter of grocery customers bought only one item, compared to half of customers that did not include grocery.