Vendors began complaining about imposed cost increases and expectations, employees rebelled and the availability on the shelf began to suffer. When Amazon implemented a new store replenishment system, the system that replaces whatever goods have been sold, it almost immediately caused seemingly catastrophic results. Despite Whole Foods having less than 2% of the US market, shares of competitors plummeted 5%-10%. Last summer, Amazon bought Whole Foods, and it has dominated the grocery conversation since.

In fact, its revenues are increasingly only driven by contracting out their ecommerce expertise rather than in online grocery.Īmazon Fresh was Amazon’s first step into the grocery market. Ocado, a purely online UK grocer with 1% of the UK grocery market, eked a profit in 2016 and returned to losses in 2017. UK grocer Tesco claims 2-3% profit margins and recently implemented steep order minimum increases to firmly position home grocery delivery as a convenient and upmarket offering. Not only is online delivery only a small part of the overall grocery market, but the profitability of online grocery is dubious. Asia is ahead of the curve with 37% of shoppers in Asia Pacific claiming to have ordered online groceries compared to 13% in Europe. Online grocery delivery remains only a small part of the overall grocery market, with online shopping accounting for about 6-7% of the UK grocery market, 5% in France and the Americas, and less than 2% everywhere else.

That being said, Amazon Go might just be the disruptive force to transform the grocery industry. The limited profitability of online deliveries leaves little room for Amazon to innovate and Whole Foods only attracts a restricted, wealthier market. Actually this is a very different market. These moves have many wondering if Amazon is about to transform the grocery business just as it did ecommerce and publishing. After entering the grocery delivery market with Amazon Fresh and buying Whole Foods, it is now in the process of launching its own supermarket, Amazon Go.

Amazon delivery grocery