[eMarketer] Amazon’s grocery business experiences growing pains

Despite investing billions of dollars, Amazon’s foray into grocery has yielded mixed results thus far, per a CNBC report.

While its grocery ecommerce business remains strong, Amazon faces increased competition as retailers such as Walmart and Kroger ramp up their digital capabilities.

Amazon has also struggled to fully leverage its brick-and-mortar locations: While Amazon Fresh stores have resonated with consumers, Amazon Go convenience stores have been less successful.

Since Amazon’s $13.7 billion purchase of Whole Foods, the company has made grocery expansion a priority. However, the company has failed to build out a brick-and-mortar presence to rival existing grocery giants, despite its willingness to experiment with retail formats and the vast amounts of cash at its disposal.

Amazon’s approach to retail seems to be to constantly debut new retail formats and see what sticks.

Upon launch, Amazon Go convenience stores seemed poised to revolutionize the shopping experience; however, their success has been hampered by a slow rollout. Four years after the first Amazon Go store opened in Seattle, there are only 24 locations, a far cry from the 3,000 the company once hoped to have open by 2021.

 eMarketer posits that physical retail continues to make up only a small part of Amazon’s overall revenues: In Q4 2021, the company’s physical stores generated $4.69 billion in sales, compared with $66.08 billion in sales for its online business, per Amazon’s earnings release.

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