Will this Thanksgiving be the year online grocery shopping takes off?
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Will this Thanksgiving be the year online grocery shopping takes off?

Ecommerce titan Amazon bought fresh food retail chain Whole Foods around 15 months ago. Since then, we’ve witnessed a slow-but-steady integration, as Amazon positions its acquisition to kickstart – then dominate – the nascent trend towards buying groceries online. According to some researchers, this Thanksgiving could be an important one which sees many Americans buy fresh food online for the first time. If they do, Amazon and Whole Foods are poised to capitalise.

Cut back by a tech backlash, Amazon’s share price has still appreciated by almost 30% year to date

graph 2111 amazon

Source: Yahoo Finance

Amazon boss Jeff Bezos has had his sights set on the online grocery selling business for years. And the market may have finally caught up to him. JDA Software, a supply chain company, has announced that about 16% of people preparing meals over the holidays will make some of their grocery purchases online. The company’s vice president, JoAnn Martin, says: “Shoppers are really moving in a rapid way to grocery delivery. There’s no indication this is a fad. Grocery retailers that don’t keep improving convenience will be left behind.”

Amazon, which spent $13.7 billion to pick up Whole Foods, is ready for these online food shoppers. This year, the company has promised quick grocery delivery from Whole Foods stores in Chicago “and other cities” until 2pm on Thursday. It’s an experiment in the kind of last-minute convenience that has contributed to Amazon’s dominant position in online retail more generally, and may provide them with an edge at Thanksgiving.

And someone who hurriedly makes a last-minute order for a forgotten condiment this year might be surprised by the ease of online grocery shopping, and bear that in mind going forward. The biggest challenge for Amazon – which is an expert at making shopping as fast, cheap, and convenient as possible – is not in providing the kind of experience that gets people to come back for more (it does that already). It’s in getting people onto its platform in the first place.

If Amazon can get a win this Thanksgiving, it will have found a foothold in what is rapidly becoming a major market. Online sales of the kind of stuff usually sold in supermarkets (food, soap, pet food, toilet roll, shampoo… that kind of thing) will double by 2022, according to Cowen & Co.

Michael Moritz is a Sequoia Capital partner who sits on the board of Instacart, and had his fingers burned in the last drive to get grocers online (remember Webvan in the late 90s? No, probably not…). He’s back in the online grocery business despite that fact, and this is why: “The conversion of grocery to e-commerce is beginning to happen at a pretty rapid rate after years of a variety of different companies like Amazon, Walmart and smaller companies banging their heads against the wall. People are starting to embrace online grocery because of all the ways technology has changed.”

Now, all that’s left to do is for Amazon to show the world how much better grocery shopping can be online.

Disclosure
Dominion holds Amazon in its Global Trends Ecommerce Fund.


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