What’s Next for Amazon: Expanding AmazonFresh Beyond Online Grocery and into Brick-and-Mortar Stores, forecasts Packaged Facts

ROCKVILLE, Md. –Dropping monthly fees associated with AmazonFresh and instead making it a free benefit for Prime members is not just about reenergizing Amazon’s online grocery service. It suggests that Amazon intends to use the brand to grow beyond the limitations imposed by Whole Foods-Prime Now relationship, reports market research firm Packaged Facts, who recently published Amazon Strategies and the Amazon Shopper, 2nd Edition.

Behind the scenes, Amazon has clearly been trying to figure out how to balance AmazonFresh and Prime Now, its 1-2 hour delivery service. Since acquiring Whole Foods in 2017, Amazon seems to have given Prime Now more attention, leveraging the upscale natural and organic supermarket leader to build out its Prime Now footprint and put the service into high gear. Already, Amazon has moved to blend existing online grocery strengths with the tantalizing potential of almost 500 Whole Foods locations and millions of loyal customers via Prime Now. And the secret sauce in Prime Now is quality and freshness, characteristics it gleans from Whole Foods.

While the service rollout has had some hiccups, Prime Now users are generally enthusiastic about the service. Per Packaged Facts’ survey results published in Amazon Strategies and the Amazon Shopper, 2nd Edition, fully 58% of Prime Now users say they are “very satisfied” with the service, and another 32% say they are somewhat satisfied.

It’s a marriage made in heaven: Compared to the average adult, Whole Foods users are far more likely to engage in online activities partial to Prime Now that underscore the online grocery delivery promise that Amazon has begun to actualize. In 2019, some 14% of Whole Foods users tapped an online grocery delivery service—roughly three times the percentage of all U.S. adults who do so.

But as with all marriages, there are limitations. Whole Foods presents an ideal starting point for Amazon’s foray into omni-channel grocery. But for the same demographic reasons, expanding via another brand is necessary to broaden the target audience beyond Whole Foods’ affluent shopper base and to avoid risking the dilution of the Whole Foods brand. Packaged Facts believes Amazon will move to expand its physical grocery presence using something other than the Whole Foods brand.

Meanwhile, for the last two years, AmazonFresh hasn’t gotten as much love: Service availability did not grow appreciably, and grocery product assortment fell below the selection offered by Prime Now. And while online food/grocery ordering usage grew 211% during 2014-2019, Amazon Prime Pantry/AmazonFresh usage declined slightly in 2019.

Integrating AmazonFresh as a free benefit for Prime members is yet another masterstroke from an online giant whose growth continues unabated. This is more than just becoming one more spoke in the Amazon Prime loyalty flywheel. The announcement increases the odds that the AmazonFresh brand will soon be displayed across physical storefronts, where Packaged Facts envisions that click-and-collect and home delivery will be offered for free to Prime members.

The question now is, when will the AmazonFresh stores begin to open?

About the Report

Amazon Strategies and the Amazon Shopper, 2nd Edition (published 10/2019, 217 pages) is available for $3,995 from Packaged Facts.

Media members please contact our Communications Manager Daniel Granderson at [email protected] for a copy of the report summary. Businesses and individuals interested in purchasing the report can contact Research Specialist Frank Gaines at [email protected] or visit https://www.packagedfacts.com/updates/Amazon.

This report provides insight in four parts:

  • The Amazon Landscape – Focuses on Amazon consumer usage and engagement trends and related consumer usage and engagement strategies, as well as Amazon’s competitive positioning. The section also focuses on Amazon products and services engagement over time, analysis includes portraits of the Amazon shopper, the Amazon media user, and the Amazon Prime member; as well as Amazon’s strategies to broaden its reach into U.S. homes and wallets.
  • Amazon Category Analysis: Grocery – Focuses on online grocery purchasing trends over time to assess purchase channel (online and in-store) shifts and preferences according to major retailer and retailer channel, and it considers Amazon’s foray into the online grocery market. Analysis is devoted to the role Amazon plays in shaping grocery trends, with attention to Amazon cross-usage among major food retailers over time; consumer usage of Amazon services such as Amazon Fresh, Subscribe & Save, Prime Pantry, and Prime Now; and trends and strategies related to Whole Foods and physical store expansion.
  • Amazon Category Analysis: Pet Products and Supplies – Focuses on consumer pet products purchasing trends over time to assess purchase channel (online, in-store, and multi-channel) shifts and preferences according to major retailer and retailer channel. Analysis is devoted to the role Amazon plays in shaping these trends, cross-usage of Amazon by customers of other major pet product retailers, and Amazon’s influence on online, in-store and multi-channel purchasing preferences.
  • Amazon Category Analysis: Financial Services – Focuses on Amazon financial services and payments consumer usage and engagement trends and related consumer usage and engagement strategies, as well as Amazon’s competitive positioning over time. It also assesses future opportunities and ramifications related to its current financial services and payments products as well as those in development.

About Packaged Facts 

Packaged Facts, a division of MarketResearch.com, publishes market intelligence on a wide range of consumer market topics, including consumer demographics and shopper insights, consumer financial products and services, consumer goods and retailing, and pet products and services. Packaged Facts also offers a full range of custom research services. Reports can be purchased at our company website and are also available through MarketResearch.com.

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