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A Foolish Take: Amazon Rules the Online Grocery Market

By Leo Sun - Jul 15, 2019 at 12:00PM

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But Walmart and Kroger aren’t that far behind.

When Amazon ( AMZN -1.38% ) acquired Whole Foods in 2017, many analysts predicted that the e-commerce giant would disrupt traditional supermarkets. Amazon's total grocery sales rose 45% last year, according to research firm Edge by Ascential, with digital sales increasing 12.5% to $8.2 billion.

Chart showing companies with the five highest e-commerce grocery sales in 2018

Data: Edge by Ascential. Chart by author.

That represents just 3.5% of Amazon's 2018 revenue, but it still led the market. However, Walmart ( WMT 1.51% ) and Kroger ( KR -2.73% ) -- which posted 10.1% and 66% digital grocery sales growth in 2018, respectively -- could still close the gap.

Edge attributed Amazon's growth to robust sales of nonperishable groceries like cold beverages, coffee, snacks, and breakfast foods, but noted that sales of fresh fruit, vegetables, and meat remained soft. Amazon is trying to sell more perishable foods with Prime Pantry, Amazon Fresh, and Whole Foods delivery options, but these plans face fierce competition from new curbside pickup and delivery options at Walmart and Kroger.

Business Insider Intelligence recently claimed that instead of disrupting the online grocery market, "the threat of Amazon led to competing grocers taking e-commerce seriously and becoming stronger competitors online." Simply put, Amazon leads the market now, but it's far too early to declare it the victor.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$3,389.79 (-1.38%) $-47.57
Wal-Mart Stores, Inc. Stock Quote
Wal-Mart Stores, Inc.
WMT
$137.51 (1.51%) $2.04
The Kroger Co. Stock Quote
The Kroger Co.
KR
$43.43 (-2.73%) $-1.22

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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