How Amazon’s Purchase of Whole Foods Affected Online Grocery Sales

Amazon’s acquisition of Whole Foods

Amazon (AMZN) has been the e-commerce leader for years, while retail giants like Walmart (WMT) have been joining the e-commerce space. Walmart.com has been the discounting giant’s biggest bet in online retail.

According to Slice Intelligence, Walmart Grocery has been the company’s most important catalyst for its online retail growth in recent quarters. This growth may have prompted Amazon to buy high-end grocer Whole Foods Market (WFM) for nearly $14.0 billion in August 2017.

How Amazon’s Purchase of Whole Foods Affected Online Grocery Sales

Amazon’s acquisition of Whole Foods was a turning point in the online grocery segment. Traffic at Whole Foods saw a huge spike after the acquisition, while sales at Amazon Fresh also saw a surge.

Soon after the acquisition went through, Amazon cut prices on many of Whole Foods’ products, which typically come at a premium given their quality.

The WFM acquisition disrupted the online grocery market

According to One Click Retail, Amazon (AMZN) online grocery sales totaled ~$2.0 billion in 2017. These sales yielded 18.0% market share in online grocery sales in the US, double that of Walmart. Amazon seems to be the runaway leader in the online grocery segment as well, thanks to its acquisition of Whole Foods. Amazon Fresh is also seeing robust growth.

Earlier in February, Amazon announced that it would launch Prime Now, a two-hour delivery service for Whole Foods products in select cities.

Amazon has also disrupted the online grocery market. Kroger (KR) has seen its stock price fall 15.0% over the last 12 months.