The Value of Walmart Grocery

Sr. Director, Client Insights and Account Management

For all the ways ecommerce has affected consumers’ lives over the past 25 years, one habit has been hard for most to break: how we shop for groceries. While many have purchased an occasional food item online, few have actually shifted to digital for conducting a significant portion of their grocery shopping, particularly for perishable goods. Online grocery shopping, for that matter, remains one of the final frontiers of ecommerce despite early fanfare and failure.

Nearly two decades after Webvan’s spectacular collapse, and with technology now further engrained in consumer shopping habits, online grocery shopping is getting a fresh look. Industry heavyweights, including Kroger, Target, Walmart, and Amazon, are investing heavily in infrastructure and technology to capitalize on the inevitable shift to increased grocery sales occurring online. Amazon’s Whole Foods acquisition and Target’s purchase of Shipt last year are just two examples.

The impending grocery faceoff between Walmart (the world’s largest retailer and the biggest grocer in the US) and Amazon (the world’s largest online retailer) is undoubtedly the one to watch. Walmart’s efforts include expanding the availability of grocery click and collect and home delivery across the country by leveraging its huge distribution advantage: 4,000 U.S. supercenters which are being outfitted to double as online grocery fulfillment centers.

Amazon, on the other hand, has several irons in the fire from offering grocery delivery and pick-up from nearly 500 Whole Foods stores, to Amazon Prime Now and AmazonFresh subscription services, the latter of which is reported to have pared service in some locations over the past year.

While their business models differ, Walmart Grocery and AmazonFresh both offer consumers a wide range of fresh, frozen, and packaged grocery options. 1010reveal found that over the past year, sales are up sharply for both retailers. However, Walmart Grocery (up 143%) achieved nearly double AmazonFresh’s growth rate and is now 4.5 times its size.

AmazonFresh shoppers order at a slightly higher frequency than Walmart Grocery shoppers, likely due to the subscription promising unlimited “free” deliveries for orders over $50. Walmart’s $30 basket minimum and $10 delivery charge, conversely, appears to be leading consumers to build bigger baskets in order to justify the charge. The average Walmart Grocery order is $74 compared to just $45 on AmazonFresh, with Walmart Grocery shoppers spending 50% more per household over the course of a year than AmazonFresh shoppers.

While Amazon’s intentions for AmazonFresh remain a mystery, Walmart recently announced plans to make its online grocery service available to 40% of US households by the end of this year. As it grows, Walmart’s private label brand Great Value is particularly positioned to benefit. Great Value is the top selling brand on Walmart Grocery and accounts for 14% of sales.  

The future of online grocery shopping seems bright, with Amazon and Walmart both poised to capture growing shares of US consumers’ grocery spend. Amazon may be attracting grocery headlines with its high profile moves, but Walmart Grocery appears to be quietly out front…in a race 25 years in the making.