Amazon's own Prime members prefer Walmart over Whole Foods. It's a worrying sign for the tech giant's grocery aspirations.
- Prime members are more likely to buy groceries online at Walmart than Amazon's stores, per a survey.
- Sixty percent said they shopped online at Walmart, versus 14% who shopped at Whole Foods.
Amazon has spent years building out its digital grocery business. But a new survey suggests that a majority of its Prime customers are looking to another retailer for groceries that they can pick up or have delivered: Walmart.
About 60% of Amazon Prime members that Coresight Research surveyed in April said that they had purchased groceries online from Walmart at least once in the past 12 months. Roughly 55% said that they had ordered groceries online from Amazon Fresh or through Amazon's website, while less than 14% said that they had ordered from Amazon-owned Whole Foods at least once.
About half of Prime members said that they had shopped at Walmart for groceries in a similar survey conducted in 2022, while 57% said that they had grocery-shopped at Amazon Fresh or on Amazon.com.
Walmart's growth in popularity among Prime shoppers comes as the retailer has expanded its own online grocery offerings, said Sujeet Naik, an analyst at Coresight. The Bentonville, Arkansas-based retailer is opening new fulfillment centers and offers free grocery delivery as a perk of Walmart+, its own subscription program, he said.
"Walmart has really stepped up its online grocery game," Naik told Insider.
Amazon, meanwhile, added fees this year for Prime members who order less than $150 worth of groceries for delivery at a time. Previously, Prime members could get free delivery from Amazon Fresh if they ordered at least $35 in items. Members of Walmart+ still get free delivery on grocery orders of at least $35, a fact that Walmart highlighted when Amazon announced its higher threshold.
"We expect this may push some price-conscious shoppers to try out or fully migrate to competitor subscription services that still offer free grocery delivery for orders over $35, such as Walmart+," Coresight said in a recent report on online grocery, which included the survey results.
Fewer 'full-basket' shoppers use Amazon, Whole Foods, study finds
Last year's edition of Coresight's survey also found that many Prime shoppers were only ordering a few items from Amazon or Whole Foods instead of everything they needed. By contrast, shoppers who ordered online from Walmart, Kroger, and Costco tended to buy more. "Those who are shopping online at those retailers, they're doing full-basket grocery shops," Naik said.
Shoppers who make at least $100,000 a year have bolstered Walmart's share of the US grocery market over the last year-and-a-half, Insider previously reported. Many have been attracted to the big box chain as food price inflation remains high.
Meanwhile, 32% of non-Prime shoppers had bought groceries online through Amazon Fresh or Amazon.com, lower than the 55% of Prime shoppers who had.
Amazon has been making changes to other elements of its grocery strategy over the last several months.
It has paused or canceled some openings of its Amazon Fresh stores. At the same time, Whole Foods CEO Jason Buechel said in January that he wants to triple the number of new store openings at his chain. Amazon paid $13.7 billion to acquire Whole Foods in 2017.
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