Amazon Grocery Gains As Coffee Brews Up Sales

Coffee is perking things up at as the company’s grocery sales reached an estimated $650 million in the U.S. for the first quarter, according to market research firm One Click Retail.

The company’s grocery sales reached $63 million in the U.K. and $80 million in Germany during the first quarter.

Grocery sales on Amazon grew by nearly 50% year over year in the first quarter, an increase of over $200 million. Coffee remains Amazon’s largest grocery category by far as well as one of its strongest growers. Both coffee and the number two category, cold beverages, gained at least 40% year-over-year to reach about $140 million in 2018’s first quarter. Together, these two categories more than quadruple the size of the third-ranked category, snack foods.

Across all three markets, Amazon pantry sales are leveling out. In the U.S., sales were $55 million in the quarter, One Click estimated, but the 14% year over year pantry growth pales in comparison to the Amazon U.S. total grocery growth of 48%. As a response to poor performance, Amazon announced in early March that pantry would shift to a subscription model instead of a per-box flat rate.

“Shifting to a membership-based service is a natural choice considering the success they’ve had with that model in the past,” said Spencer Millerberg, One Click Retail CEO. “Whether or not pantry’s fortunes improve, Amazon’s clear commitment to subscription-based services is going to have a strong impact on brands. With the ongoing rollout of Prime Now two-day grocery delivery into more jurisdictions throughout the U.S. and the global success of other value-added ‘members only’ features such as Amazon Fresh and Prime Day, Amazon is growing what is essentially the world’s largest customer loyalty program, loyalty not only to the platform but also to the brands that sell through it.”