Amazon (AMZN - Free Report) is firing on all cylinders in the grocery retail market backed by its expanding delivery services and Prime service.
The company has rolled out the delivery service of natural and organic products such as meat and seafood, fresh produce and staples from Whole Foods Market in 10 more cities of the United States, consequently taking the total to 38 cities.
With the latest step, Amazon will enable the customers shopping via Prime Now at Whole Foods stores located in New Orleans, Oklahoma City, Charlotte, Las Vegas, Memphis, Nashville, Phoenix, Raleigh, Seattle and Tucson, to avail the fast delivery services. This is in sync with the company’s continued focus toward enriching shopping experience for the customers.
We note that the ongoing expansion of the company’s quick delivery service from Whole Foods stores along with additional discounts and other benefits across the United States is likely to drive the subscriber base of Prime. Consequently, this will drive the top-line growth of the company.
Growing Presence in U.S. Retail Space
Per a report from IGD, the U.S. grocery retail market is expected to reach $1.7 trillion by 2022 at a CAGR of 3.6% between 2017 and 2022.
Additionally, the report suggests that online grocery shopping is anticipated to hit $20 billion by 2022 by registering a growth of 18.1% over the same time frame, making it the fastest growing segment.
The acquisition of Whole Foods Market last year helped Amazon bolster its presence in the grocery retail market. Moreover, Amazon Prime has played a significant role in shaping the company’s growth trajectory in this market with its loyalty programs and customer friendly offers.
Moreover, Amazon’s strong efforts toward enhancement of its fast delivery services for groceries will continue to aid it in rapidly penetrating the market.
Amazon’s recent expansion of delivery services also includes the neighborhoods of New York City, Los Angeles, Dallas and Fort Worth.
Last month, the company announced the expansion of delivery services of natural and organic products from Whole Foods stores in Columbus, Dayton, Portland, Greater Washington D.C. and additional areas of New York City like Greenwich Village, Chelsea, Union Square and Murray Hill.
Further, Amazon recently introduced grocery pickup service which enables the customers to shop Whole Foods’ selected items like fresh and organic stuffs, bakery, dairy, meat and seafood, floral and everyday staples via Prime Now and pick up these groceries within 30 minutes by parking their car in reserved pickup spot.
The service is currently available in Sacramento and Virginia Beach. The company is planning to expand this service to more cities throughout this year.
Further, Amazon made the Prime Whole Foods discount of 10% available at 121 Whole Foods Market stores located across 12 U.S. states in the second quarter 2018.
We believe Amazon’s strategy of rewarding the customers will continue to benefit its market position.
All these strong endeavors will aid Amazon in strengthening its competitive position against the likes of Walmart (WMT - Free Report) , Target (TGT - Free Report) and Kroger (KR - Free Report) , which are the major players in the U.S. grocery market.
Walmart acquired Parcel and extended partnership with Deliv to support its same day delivery initiative. Recently, it has recently introduced a last-mile delivery pilot – Spark Delivery — in an attempt to expand its grocery delivery services across 100 metro areas in the United States by 2018.
Further, it is leaving no stone unturned to capitalize on the online grocery space.
Target also acquired Shipt to expand its same day delivery services. The company has recently launched same day delivery services in U.S. states of Montana, Maine and New York, especially in the greater New York City. Moreover, it is planning to roll out the service in California, starting from Bay Area.
Moreover, its buyout of Grand Junction has improved its delivery capabilities.
Further, Kroger’s recently acquired Ocado, which is likely to intensify the war in the U.S. grocery market.
Meanwhile, Amazon just quadrupled its order for Mercedes-Benz vans to support its delivery service program “last-mile”, which is set to pick up deliveries from 75 supplier centers around the United States.
Hence, Amazon with Whole Foods, Prime Benefits and strengthening delivery services, is likely to keep gaining momentum in the market.
Currently, Amazon carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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