uploads///US Online Grocery Sales

How Amazon Is Disrupting the Online Grocery Market

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Jun. 15 2016, Updated 11:04 a.m. ET

Amazon’s Prime Now gives the jitters to online retailers

Amazon’s (AMZN) Prime Now service, which is a one-hour delivery service available to its Prime members, is giving traditional retailers the jitters. This fast delivery option could encourage a lot more people to opt for Prime Now in order to purchase food.

Amazon isn’t new to online grocery retailing. The company already offers its AmazonFresh service for delivering groceries in select cities in the United States. However, its service has negligible business compared to some of the big players operating in this space.

The US online grocery market is growing at a healthy rate, and through its new initiatives, Amazon is clearly looking to leverage the huge US food retail market.

The US online grocery market generated sales of about $7 billion in 2015, and it’s expected to reach $18 billion by 2020.

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How Amazon is shaking up the industry

Amazon’s entry into the already crowded fresh food market could further heat up the competition among grocery retailers. What’s more interesting is how Amazon keeps disrupting different industries.

According to the Wall Street Journal, Walmart (WMT) is partnering with Uber and Lyft to test run a grocery delivery service to compete with Amazon. Walmart, which already offers curbside pickup, launched a similar program earlier using Deliv.

In a similar move, Alibaba (BABA), and its affiliate Ant Financial Services Group announced that they would invest $1.3 billion in Chinese (FXI) food delivery player Ele.me. Meanwhile, Google (GOOG) is another major player that expanded its Google Express service early this year to include the same-day delivery of fresh groceries.

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