Amazon has set its sights on the grocery food market – and in order to make it another one of its $10 billion businesses, it's going to need to expand.
That’s according to The Motley Fool, which wrote in a report this past weekend, citing FMI and Nielsen, that the online grocery market could hit $100 billion in sales by 2025, accounting for 20 percent of all grocery sales around the globe. By 2022, it is projected to be a $41 billion market, according to Packaged Facts – up from $13 billion in 2017.
Most of the online grocery sales are coming from "center store" items rather than produce, meat, dairy or baked goods. FMI and Nielsen have predicted that center store volume will move to the internet by 2025.
Motley Fool noted that Amazon saw 59 percent growth in U.S. grocery sales in 2017, in large part due to its acquisition of Whole Foods. This acquisition enabled Amazon to sell Whole Foods' 365 Everyday Value private label products on its online marketplace, which drove higher sales of Amazon Fresh.
In addition, Amazon is now taking online grocery shipments at around 450 locations. Expanding in that area would help the company retain a lead over Walmart in the fresh food category, Motley Fool reported.
Given the size of the online grocery market and Amazon’s current position, the report stated that it's likely the eCommerce giant will hit $10 billion in internet grocery sales in the not-too-distant future. FMI and Nielsen estimate that it can reach $10 billion by 2025, but Motley Fool thinks it will be much quicker than that.
“Whole Foods provides the brand recognition and the infrastructure to expand online grocery sales through mechanisms like online order and pick up or launching Amazon Fresh in more markets,” wrote Motley Fool. “Amazon is also experimenting with meal kits, representing yet another avenue to drive grocery sales. And as Amazon works to draw more customers to its brick-and-mortar grocery stores, it will build up brand equity that could translate into online sales as well.”
Motley Fool predicted that Amazon could be a $10 billion business by the beginning of the next decade if it expands quickly.