Analysis suggests Amazon Grocery market share gains may be slow

Investing.com -- Amazon’s push into same-day grocery delivery is beginning to take shape, but early analysis indicates that market share gains may be gradual, according to Wells Fargo (NYSE:WFC).

“Amazon’s same-day grocery push has raised concerns for staples retail, but early analysis suggests it’s not yet a significant threat,” Wells Fargo wrote. “While underestimating Amazon (NASDAQ:AMZN) doesn’t seem wise, share capture may be slow.”

Pricing has been a clear advantage, with Wells Fargo’s survey across five cities showing Amazon priced “7% below Walmart (NYSE:WMT), 16% below Kroger (NYSE:KR), and 24% below Albertsons (NYSE:ACI) on like-for-like items.” 

In organics, however, Amazon was priced 3% above Sprouts and 11% above Walmart, though still 5–8% below Albertsons and Kroger. Analysts noted that “many items were on sale,” suggesting Amazon may be investing in adoption of its fresh offering.

Selection remains a hurdle. “Prime same-day grocery selection looks somewhat limited and varied by geography,” Wells Fargo said, adding that Amazon offered only about 50% of SKUs in its conventional and organic baskets on average. 

The bank added that the experience “felt clunky,” with substitutions often required.

Delivery also presents challenges. “We noted an uncomfortably wide 4–5 hour delivery window, which could be a point of friction as consumers assess convenience,” Wells Fargo wrote, contrasting this with the roughly two-hour standard at rivals such as Walmart, Kroger, Albertsons, Shipt and Whole Foods.

Overall, Wells Fargo expects Amazon to improve on these early issues. 

“Prime same-day grocery has potential to be a solid competitor to staples retail if Amazon continues to invest in the offering,” it said, though for now the expansion is “not thesis-changing.”