Amazon emerging as key grocery competitor in Australia

Amazon is emerging as a significant competitor to Coles and Woolworths in Australia.

Goldman Sachs indicates it is the second-largest online retailer in the country, although its sales remain small compared to major supermarkets.

Amazon plans to enhance its delivery capabilities, aiming for same-day delivery in major cities by 2026.

Since 2011, it has invested $11 billion in Australia, with $5 billion in the past year alone, and it intends to invest another $1.6 billion by 2026.

Projected gross merchandise volume for Amazon is expected to rise from $4.5 billion to $6.5 billion this year.

Grocery sales

Grocery sales, including snacks and beauty products, are a key concern for Coles and Woolworths, with Amazon forecasted to generate $1.3 billion in grocery sales, though this is still only 1% of total supermarket sales.

Amazon considers Australia an “emerging” market, focusing on expanding its grocery offerings to appeal to consumers seeking quick delivery.

To support this, it has established seven fulfilment centres and multiple logistics centres across the country, with a goal for faster delivery.

Online grocery shopping in Australia currently sits at only 7%, significantly lower than the US and UK, indicating potential growth for Amazon.

Both Woolworths and Coles reported strong online sales growth in recent months, which may factor into the ACCC’s ongoing investigation of the supermarket sector.