Ama­zon push­ing on­line gro­cery biz in prime time

Orlando Sentinel - - NATION & WORLD - By Spencer Soper and Craig Gi­ammona

Ama­zon.com proved it can use bar­gain buzz to sell a lot of gad­gets on a ran­dom day in July. This year, it’s hop­ing ex­cite­ment around Prime Day gets shop­pers to change how they buy gro­ceries.

Ama­zon’s fourth an­nual Prime Day — 36 hours of sales be­gin­ning next Mon­day — will be its first since clos­ing the $13.7 bil­lion pur­chase of Whole Foods Mar­ket. It is of­fer­ing dis­counted straw­ber­ries, chicken breasts and cod fil­lets to lure peo­ple into its brick-and-mor­tar stores, as well as en­tice­ments to get them to try gro­cery de­liv­ery for the first time.

Suc­cess for Ama­zon will be mea­sured by how many peo­ple switch up their rou­tines in re­sponse to the pro­mo­tion and de­velop new habits. The $800 bil­lion gro­cery mar­ket has been hard for Ama­zon to crack since so many shop­pers al­ready make weekly trips to su­per­mar­kets and big-box stores run by the likes of Kroger and Wal­mart. Re­tail­ers have also stepped up their own dig­i­tal of­fer­ings, in­clud­ing a buy-on­line-pick-up-in­store op­tion.

“They’re un­likely to lure a cus­tomer away, but maybe they can take a bit of the spend­ing,” said Jennifer Bar­tashus, a re­tail an­a­lyst at Bloomberg In­tel­li­gence. “Your av­er­age Kroger shop­per isn’t go­ing to mean­ing­fully change their shop­ping pat­tern based on be­ing a Prime mem­ber.”

Ama­zon had gro­cery sales of $2 bil­lion in 2017, rep­re­sent­ing 18 per­cent of the on­line mar­ket in the U.S., ac­cord­ing to One Click Re­tail es­ti­mates. That’s a tiny frac­tion of over­all gro­cery spend­ing, but Ama­zon proved with books and elec­tron­ics how quickly habits can change. On­line gro­cery sales will grow to $100 bil­lion as soon as 2022, ac­cord­ing to the Food Mar­ket­ing In­sti­tute and Nielsen.

That’s why Ama­zon is pro­mot­ing so many gro­cery of­fer­ings on Prime Day, try­ing to ex­tend the loy­alty of 100 mil­lion global Prime mem­bers to the food aisle. Prime mem­bers, Ama­zon’s most ac­tive shop­pers, pay monthly or an­nual fees for ship­ping dis­counts, movie stream­ing and other ser­vices.

Af­ter a decade of try­ing to sell fresh food on­line, Ama­zon found that most dis­cern­ing food­ies want to in­spect fresh veg­gies and meat in the flesh be­fore buy­ing. So it’s of­fer­ing Prime mem­bers $10 to spend on­line dur­ing Prime Day if they buy at least $10 of gro­ceries at a Whole Foods store this week. Shop­pers us­ing Prime Pantry, a sub­scrip­tion ser­vice for bulk gro­cery or­ders, can get a free box of Chee­rios through a joint Prime Day of­fer from Ama­zon and Gen­eral Mills Inc.

The pro­mo­tions show how Ama­zon is en­cour­ag­ing shop­pers to sep­a­rate their gro­cery lists: Go to the store for fresh meats and pro­duce; skip that trip for ce­real, cof­fee and de­ter­gent you can buy sight un­seen.

“They want peo­ple to re­al­ize how much stuff in their kitchens they don’t need to schlep to the store for any­more,” said Paco Un­der­hill, founder of be­hav­ioral-re­search firm En­vi­rosell. “Ama­zon wants to train peo­ple to shop dif­fer­ently.”

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