Walmart and Amazon are fiercely competing for dominance in the organic food market due to the increasing consumer demand for healthier and sustainably sourced products.
The competition reflects a strategic pursuit to capture online or ecommerce food market share in a sector that aligns with evolving consumer preferences for healthy, organic, and ethically produced and environmentally friendly food options.
Latest reports by industry analysts suggest that Walmart is cementing its dominance of the U.S. ecommerce grocery online food market and expect it to generate online retail foods sales of $58.92 billion in 2024, up from $49.32 billion in 2023— an increase of 19.5%. By comparison, Amazon will see its ecommerce grocery sales rise by just 10% during the same period, from $36.41 billion in 2023 to $40.5 billion in 2024, the research firms predict.
Rising demand for organic food and sustainable healthy choice in groceries
With the rising awareness of the benefits of healthy organic foods, and the desire to avoid obesity and weight management through healthier options, both retail giants recognize the lucrative potential of catering to health-conscious consumers.
Walmart, with its extensive physical store network and commitment to affordability, seeks to make organic options widely accessible to a diverse customer base.
On the other hand, Amazon leverages its e-commerce dominance, innovative technologies, and the acquisition of Whole Foods to offer a seamless online shopping experience for those seeking a convenient and varied selection of organic products.
There are now 17 major grocery chain stores that are offering organic groceries and are continuing the expand their product offering, though their challenge is often with sourcing, rather than provision strategy. Trader Joe's is doing a good job sourcing, and were one of the first to explore offering affordable organic products and groceries that consumers want.
'Amazon Prime' and 'Walmart Plus' fresh groceries and ready-meal kit delivery services
Amazon Prime and Walmart Plus offer retailer memberships that provide customers with benefits for online shopping and food delivery,
Amazon Fresh now charges a $9.95 delivery fee for orders under $50; a $6.95 delivery fee for orders between $50 and $100; and a $3.95 delivery fee for orders between $100 and $150. Orders $150 and up qualify for free delivery. Previously, Amazon only required users to spend $35 to qualify for free delivery (or $50 in New York City).
Anyone can get groceries delivered through Walmart Plus without a membership, but delivery fees range from $7.95 to $9.95. With the Walmart Plus membership, delivery is free, so long as shoppers spend $35.
Amazon Prime offers a vast selection of products, including groceries through services like Amazon Fresh, and provides fast shipping, streaming services, and exclusive deals, making it a comprehensive membership package.
However, the cost of Amazon Prime is relatively higher, and some customers may find that not all products are available for same-day delivery. On the other hand,
Walmart Plus offers a more affordable membership with benefits like unlimited free delivery on eligible items, including groceries, and fuel discounts at Walmart gas stations.
Walmart Plus is advantageous for those who frequently shop at Walmart and prefer a budget-friendly membership.
However, its product selection may be more limited compared to Amazon, and the delivery speed might not be as fast in certain areas.
Ultimately, the choice between Amazon Prime and Walmart Plus depends on individual preferences, budget considerations, and the specific shopping and delivery needs of the customer.
Walmart vs. Whole Foods and how Amazon's $13.7 billion bet has failed so far
- Wallmart Brick-and-Mortar Presence
- Walmart has a vast network of physical stores, some strategically positioned geographically, making it easy for customers to access organic products in person.
- Walmart often offers organic options in its grocery sections, emphasizing convenience for shoppers who prefer in-store experiences. Amazon does so at Whole Foods Market, so it's more indirect and hands-off.
- Pricing Strategy
- Walmart is known for its commitment to offering affordable products. The company aims to make organic food accessible to a broader customer base by keeping prices competitive.
- Amazon offers subscription services like Amazon Fresh and Amazon Pantry, allowing customers to regularly order groceries, including organic products, with the convenience of home delivery.
- Branding Strategy vs. Private Label Branding
- Amazon is a leading online marketplace, making it a convenient platform for customers to purchase organic food from various brands and sellers.
- Walmart has its own private label brands, including organic options. These private labels often provide cost savings for both the retailer and the customer.
- Technology Advantage & Online Presence
- Amazon leverages technology, such as the use of Amazon Go stores, to enhance the shopping experience. This includes cashier-less stores that streamline the checkout process.
- While Walmart has an online presence, its focus has traditionally been on physical stores. However, the company has been expanding its e-commerce operations to compete with online retailers like Amazon.
- Organic Fresh Healthy Options Groceries
- Prime members can access services like Amazon Fresh, which includes a selection of organic and locally sourced products. Prime Pantry also caters to customers looking to stock up on groceries.
- While Walmart has an online presence, its focus has traditionally been on physical stores. However, the company has been expanding its e-commerce operations to compete with Amazon and is looking to expand its organic, healthy foods, and fresh-to-your-door delivery services.
- Market Reach
- Walmart is the largest retailer and has an extensively coverage throughout the U.S. (and the world) with its retail stores.
- Amazon's acquisition of Whole Foods Market in 2017 significantly expanded its presence in the organic and natural foods sector, providing access to a well-established brand and a network of physical stores.
- Strategic Competition
- Both Walmart and Amazon are competing for a share of the growing organic food market, but they approach it differently, with Walmart emphasizing its physical presence and affordability, and Amazon leveraging its e-commerce dominance and technology.
- Walmart tries to copy Whole Foods as often as it can, for instance it rolled out redesigned produce sections in the grocery areas of its U.S. stores, with an “open market feel,” low-profile bins, wide aisles, and a dedicated section for organic items, seeking to emphasize its fresh produce.
- Consumer Preferences
- Walmart often caters to a broad customer base, including those who prefer in-store shopping, while Amazon attracts customers who appreciate the convenience of online shopping and services.
- Groceries represent an estimated $675 billion U.S. market that is increasingly going online and organic and healthy foods sales will grow 18.2 percent to nearly $20 billion this year, making it “the fastest-growing product category online.
- Supply Chain and Sustainability
- Both companies are likely to focus on building sustainable and transparent supply chains for their organic products to meet the increasing demand for eco-friendly and ethically sourced goods.
- The strategies of these companies continues to evolve over based on market trends, consumer preferences, and industry developments. The key is that they have prioritized their current strategies on the organic food sector and home-delivery of fresh healthy foods.
- What's Interesting in this Competition
- Walmart is the largest grocer in America in terms of sales, by a large margin. Walmart's Online store has items delivered to the store. They have a network of semi-trucks to supply their stores.
- Amazon is the biggest online retailer. Amazon's sales have skyrocketed in both the e-commerce and retail industries. Amazon's net income is greater than Walmart's. In the last fiscal year, Amazon's net income was approximately 33.36 billion USD, while Walmart's was 13.67 billion USD. That should worry Walmart.
