Amazon Fresh a Bright Spot for Company Amid Challenging Q3

Since the first Amazon Fresh opened in September 2020, Amazon has expanded the number of brick-and-mortar grocery store concepts to 19 stores nationwide — and foot traffic has been increasing.

Physical store sales were a bright spot for Amazon in an otherwise challenging third quarter. Sales in online stores rose 3% from a year earlier to $49.9 billion, while physical store revenue increased 13% to $4.27 billion, CNBC reported Friday.

In Amazon’s third quarter earnings call on Thursday, chief financial officer Brian Olsavsky noted that the company is moving its Just Walk Out Technology into Amazon Fresh locations following positive customer reception at Amazon Go locations, adding: “It really eliminates one of those things that people may not realize is such a hassle or deterrent to shopping: waiting in line.”

Amazon also plans to leverage its Fresh locations to meet consumer’s growing demand for rapid delivery service. “We’re well on our way to providing ultra-fast delivery for things like groceries,” Olsavsky added.

Growth Overview

A new report by analytics firm analyzed foot traffic at eight Amazon Fresh locations that opened on or before February 2021. Findings showed overall visits grew by more than 1,000% as of August 2021, with a slight decline to 800% in September.

Furthermore, a baseline change analysis shows that monthly foot traffic has generally stabilized across most of the locations.

As the report notes, the relative steadiness in visits shows that a core group of customers have added a trip to Amazon Fresh to their regular grocery routine, indicating that Amazon Fresh has successfully integrated into the grocery mix for the neighborhoods it entered.

Broad Shopper Cross Over

To understand where the concept stores fit into the larger grocery landscape, also analyzed grocery cross-pattern shopping at four Amazon Fresh locations during the month of September 2021.

Results revealed a broad crossover in shopper behavior. A notable number of Amazon Fresh customers also shop at grocery stores such as Trader Joe’s or Amazon-owned Whole Foods. But the higher percentage, Amazon Fresh’s biggest competitors, are bigger, low-priced grocery stores, like Ralphs in California or Jewel-Osco in Illinois.

As the report suggests, Amazon’s grocery evolution will center more largely around a value-oriented push with Amazon Fresh. “This would play directly into Amazon’s wider strength in distribution and convenience-oriented efficiency as opposed to a higher-end approach that would emphasize quality and a different type of in-store experience,” the report noted.