Amazon announced its Q2 earnings yesterday, and unsurprisingly, the company’s grocery business went gangbusters during that time. Amazon said that its online grocery sales tripled in Q2 compared with the same time period last year.
Of course, this growth can be attributed to the COVID-19 pandemic, which was in full swing during the last few months. With large swaths of the country sheltering in place, people were pushed into grocery e-commerce. So much so that online grocery shopping experienced record sales month after month in Q2, hitting $7.2 billion in June.
This sudden demand for e-groceries caught every retailer, including Amazon, off-guard. Overwhelmed by demand, Amazon had to put new Amazon Fresh and Whole Foods delivery customers on a waitlist before they could place any orders.
To help ease the strain Amazon even went to more extreme measures, like converting the first of its full-on grocery stores in Woodland Hills, CA into a delivery-only fulfillment center. According to its earnings release yesterday, the company has increased grocery delivery capacity by more than 160 percent and tripled grocery pickup locations.
The COVID tide is raising all grocery retail boats as restaurants yo-yo between being open and closed. Amazon’s news comes days after grocery retailer Albertsons said that sales rose 21 percent to $22.8 billion for the quarter ending June 20, and that digital sales more than tripled.
The question Amazon, Albertsons and the entire grocery industry now face is how much of this record e-commerce spending is permanent. We’ve had basically five months of restricted movement/lockdowns, which is plenty of time for a new habit like buying groceries online to set in. Will people stick with it? And specifically for Amazon, will this alter any of it plans as it expands its real world grocery footprint? Amazon did debut its new smart shopping cart during Q2 as well, which indicates that it still expects people to shop at brick-and-mortar stores in some fashion in the future.
Like everything in the world right now, we’re watching it change in real time, and its unlikely anything will be settled by the end of Q3.