- Amazon has extended a promotion to sellers that reduces the referral fee on non-perishable grocery products under $15, according to Business Insider. The retailer will only charge an 8% fee on products $15 or less, rather than 15%.
- The original program was announced in October 2017 and was scheduled to end this October. It has now been extended to December 2019.
- This promotion could encourage vendors to sell more everyday grocery products, and lead shoppers to buy these foods online.
Amazon’s extension of this promotion to sellers suggests it has been a successful strategy so far. But it also shows that Amazon is doing everything it can to maintain its spot as the largest online retailer.
The discounted fee on grocery products less than $15 helps add more sellers to Amazon’s portfolio. It's an incentive for sellers to offer lower-priced goods on Amazon, which could drive more shoppers to lean on the web giant for everyday groceries that they would typically purchase at brick-and-mortar stores, like a bottle of juice or an eight-ounce bag of chips.
Larger products like a family-size bag of Oreos or huge box of granola bars tend to sell for a wholesale price, which offers lower profit margins and can be less appealing to sellers. They also are generally more expensive for a retailer to ship and store. In contrast, smaller items tend to be sold at a retail price, which gives sellers more wiggle room to adjust profit margins and afford Amazon’s fee.
Kroger and Walmart are both major grocery destinations that attract different types of shoppers. But one thing they both have in common is their ability to innovate and succeed in e-commerce. Kroger, the nation’s largest grocery chain, has upped its e-commerce game. In just the last five months, the Cincinnati retailer has signed an exclusive agreement with Ocado that will bring the British e-grocer’s automated fulfillment capabilities to the U.S., expanded its same-day delivery service through Instacart and announced that its same-day click and collect service, known as Clicklist, is available across roughly 45% of its 2,800 stores.
Walmart, on the other hand, has an even bigger advantage as it is the largest retailer in the world. It continues to build up its grocery business but has not amassed a meaningful market share online. The company recently unveiled a new e-commerce website that features virtual shopping and piloted Waymo, an automated vehicle that picks up consumers and brings them in store. The Arkansas retailer also recently filed for patents on a temperature controlled delivery truck and docking station with removable lockers.
Time will tell whether these efforts are enough to expand the grocery offerings on the retail giant's website, or make much of a difference to shoppers. Despite growing consumer familiarity with Amazon, and the deals offered through Whole Foods, 84% of Americans say they never buy groceries online — an obstacle Amazon and its rivals are striving to overcome. But there are signs that this is changing. With online grocery expected to reach $100 billion by 2022, Amazon, Kroger, Walmart and other retailers are doing anything they can to gain an edge in the fast-moving segment.