Amazon plans to compete with app-based grocery-ordering and food delivery giants Instacart, as well as other companies such as DoorDash and Uber in a push for a share of the fast-growing market that took off in 2020 during pandemic lockdowns.
Already a force in the brick-and-mortar grocery store business, Amazon bought Whole Foods in 2017 for $13.7 billion — a cataclysmic event in the grocery world — and rolled out tech-enabled stores Amazon Fresh and Amazon Go. “The covid pandemic shifted the industry’s focus toward food delivery, which only played further into Amazon’s strengths,” according to Slate’s podcast, “Thrilling Tales of Modern Capitalism.”
As of June 2021, the U.S. grocery-delivery market has largely been dominated by Instacart and Walmart Grocery
As of June 2021, Walmart Grocery holds 48 percent of grocery delivery sales and Instacart represents 45 percent, Bloomberg Second Measure reported.
The Information learned, partly from job listings, about Amazon’s plans to expand online grocery ordering and delivery throughout the U.S. and Europe in 2022.
Clues about Amazon’s plans surfaced in eight job listings the company posted recently for managers in its “fast-growing” grocery partnerships teams operating in Los Angeles, Seattle and Arlington, Va. Multiple job postings described the team’s purpose as enabling “Prime customers to shop the selection from grocery stores on Amazon.com and receive their order via ultrafast delivery in 2 hours or less,” The Information reported. Some job descriptions included “representing Amazon when meeting with merchant partners.”
Amazon has experimented with grocery delivery for more than 10 years, mostly with its own grocery products. Expanding to deliver for other supermarkets “would reflect the strategy that Amazon has pursued as it has expanded its online marketplace from books to an ‘everything store,'” The Information reported.
App-based restaurant-delivery services DoorDash and Uber Eats are also expanding. DoorDash announced a deal earlier this year to deliver groceries for Albertsons supermarket, and Uber recently acquired grocery-delivery firm Cornershop.
A growing number of instant-delivery startups operate in major metro areas such as New York, competing to deliver groceries in 15 minutes or less, including Jokr, Fridge No More and Buyk. Online grocery sales in the U.S. grew nearly 64 percent year over year in 2020, according to estimates from research firm eMarketer.
Amazon’s entry in the grocery delivery market threatens Instacart, whose market share in 2020 was 84 percent of the U.S. grocery intermediary market, delivering goods for established brick-and-mortar grocers such as Costco and Wegmans. Instacart has said it will respond to Amazon by positioning itself as a more reliable ally, partnering with grocers rather than competing with them, while Amazon is seen as a major threat to the grocers it partners with because Whole Foods is a direct competitor.
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