Amazon grocery sales surge on perishables demand

Amazon’s grocery division is expanding at a quicker pace than its broader retail operations, with demand for perishables and essential items leading the way. Over the past 12 months, Prime members’ monthly orders of fresh groceries eligible for free same-day delivery surged by more than three times, based on the company’s most recent earnings call.

This emphasis on speed is fueling Amazon’s grocery sales growth. In the third quarter, perishables and everyday essentials grew approximately three times faster than other product categories, now representing nearly half of all units sold. Customers who purchase perishables through same-day delivery also buy nearly seven times more units of everyday essential items than those who do not shop for perishables in this manner.

Andrew Jassy, Amazon’s CEO, described the trend as meaningful. “A lot of grocery starts with perishables,” he noted. “And so we really are excited that we feel like we found something with shipping perishables out of our same-day facilities.” The company plans to open six additional Whole Foods locations in November, including a prominent store in Los Angeles. While Amazon does not break out Whole Foods sales separately, the chain remains a critical driver of growth.

The pharmacy sector is also seeing expansion, with customer usage rising over 60% year-over-year. Additionally, Amazon’s AI-powered shopping assistant, Alexa for Shopping, has experienced rapid adoption: over 400 million users engaged with it in the past year, with interaction rates climbing 570% annually. Shoppers in the U.S. who use Alexa for purchases spend about 50% more per order compared to those who do not.

Despite strong performance in grocery and pharmacy, Amazon’s third-quarter earnings fell short of analyst forecasts. The company reported earnings of $1.89 per share and revenue of $201.9 billion, below the expected $1.97 per share and $202.25 billion. Ad revenue underperformed, and investments in AI technology reduced cash flow.