Once the fastest growing online retailer, Amazon is now primed to become the fastest growing offline retailer. However, with only nine percent of Americans reporting that they regularly purchase groceries online, the road to digital innovation has been slow. After Amazon’s acquisition of Whole Foods, not only did several established players see a dip in the market, but it suddenly became clear just how ripe for the picking the online sector was for grocery.
While Whole Foods epitomized high quality and higher prices and Amazon favored mass appeal, the move for Amazon to swallow up Whole Foods is indicative of the evolving commercial landscape, not only for grocery, but for all categories. In fact, Amazon is fast becoming the retail version of the consumer, an idea that Scott Galloway unfolds in a recent Recode Decode. What matters most to consumers is no longer quality, but rather, convenience. Finding the highest quality of a category takes nothing more than a few clicks. What remains is the race for convenience and, notably, opportunities for online pure plays to take shape regionally.
In addition to Amazon’s acquisition of Whole Foods, this new sector growth is due in part to an overarching use of mobile and location services. Online grocery delivery service, Instacart alone owns almost one in every four search ads served against regional grocery terms. Paired with a prompt that asks users to enter their zip code and choose a retailer accordingly, even retailers who don’t have brick-and-mortar foundations can break into the grocery e-commerce market.