Amazon's Grocery Sales Get a Lift -- WSJ

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (January 17, 2018).

Whole Foods' brand items like bacon, coconut water and frozen blueberries helped Amazon.com Inc. gobble up more U.S. grocery sales last year.

Products carrying the natural foods chain's brand helped push sales at Amazon's online grocery-delivery service, AmazonFresh, up 35% to $135 million in the last four months of 2017 over the previous four months, according to data analytics firm One Click Retail. Amazon bought Whole Foods last summer.

Top selling items included organic baby spinach, shredded Parmesan cheese, organic riced cauliflower, unsalted butter and smokehouse bacon, the analysis found.

Amazon is building out its grocery delivery service to capture more of an increasingly competitive market. Amazon sold an estimated $11 million of Whole Foods' 365 Everyday Value natural and organic products last year, small compared with the private-label sales of its supermarket competitors. Kroger Co.'s. natural and organic brands are nearing $2 billion in sales a year, while Albertsons Cos. said this month that its organic line does $1 billion in annual sales.

But food analysts said Whole Foods products are helping AmazonFresh compete with online grocery companies. "It...may be bringing new people into AmazonFresh," said Jim Hertel, senior vice president at food retail consultancy Inmar Willard Bishop Analytics. "That would be a real positive."

Blair Reeves, a 36-year-old software product manager in Manhattan, doesn't shop at Whole Foods stores but has regularly bought the chain's 365 Everyday Value brand of products since they began appearing on AmazonFresh. "They are the first choice whenever you search for spaghetti or milk or butter," he said.

Online grocery sales account for less than 3% of the roughly $800 billion grocery market. Analysts expect that share will grow into the double digits in the next five years. Amazon sold nearly $2 billion in groceries in the U.S. last year, according to One Click, which analyzes patterns in e-commerce transactions.

Just $350 million of that was through the AmazonFresh service, where shoppers tend to purchase perishable produce and meat, according to One Click. The remainder was delivered through Amazon's standard platform as well as its Pantry and superfast Amazon Prime Now service, where shoppers tend to purchase bulky foodstuffs like water, coffee and Soylent meal-replacement drinks.

Amazon is selling Whole Foods products on those platforms too. Rising grocery sales on Prime Now proves the worth of selling Whole Foods products there, Morgan Stanley said in a recent report.

Jill Gifford, a 47-year-old stay-at-home mother in Renton, Wash., has ordered Whole Foods salsa, taco shells and macaroni on Prime Now. She said she might keep buying those products there instead of driving to her local Whole Foods.

Whole Foods and Amazon spokeswomen declined to comment.

Write to Heather Haddon at heather.haddon@wsj.com

(END) Dow Jones Newswires

January 17, 2018 02:47 ET (07:47 GMT)