Amazon is set to nearly double its online food sales globally over the next five years seeing it overtake the US’ largest retailer Walmart.
Amazon’s online grocery sales business is expected to top $26.7 billion by 2026, nearly double its current $14.5 billion, according to figures from Edge Retail Insight.
The online behemoth is set to enjoy a compound annual growth rate (CAGR) of 13 per cent over the same period, seeing it overtake Walmart’s own online grocery arm despite it expected to see a higher CAGR of 14.1 per cent, topping $19.5 billion by 2026.
“The COVID-19 pandemic has led to a massive uplift in demand for online grocery shopping missions. Amazon has been developing its online grocery business, and the Amazon Fresh service has been expanding in international markets as well,” Edge by Ascential’s senior retail analyst David Gray told Supermarket News.
“So that’s one of the key operators that we’re expecting to grow very strongly over the next few years”.
According to the research, 53 per cent of Amazon’s grocery sales during its fourth quarter last year, which grew 20 per cent to $2.2 billion, were made via third-party sellers on Amazon Marketplace.
“It’s interesting with Amazon because they have a growing fresh business where they’re partnering with different retailers around the world — Morrisons in the U.K., Dia in Spain,” Gray added.
“The expansion of the fresh business internationally, I think, is going to be quite a big driver of growth. But also on (Amazon.com), you obviously can order lots of groceries, ambient-type products with a longer life.”
While Amazon is on track to overtake its rival, Walmart is still forecast to see rapid growth in online grocery thanks to its huge investment in its logistics capabilities.
Gray continued: “Over the years, we’ve seen Amazon moving more into Walmart’s space in terms of physical retail, with acquisition of Whole Foods, and Walmart moving more into Amazon’s space in terms of pure-play (online) retail.”