Amazon leads in online grocery shoppers, but lags in spend

This is an excerpt from a story delivered exclusively to Business Insider Intelligence E-Commerce Briefing subscribers. To receive the full story plus other insights each morning, click here.Amazon has a steady lead among grocers when it comes to where online grocery shoppers choose to shop: 62.5% of consumers who bought groceries online in the past 12 months did so from Amazon, beating the 37.4% who said they shopped Walmart and the 15.7% who bought from Target, according to a report from Coresight Research.However, Walmart narrowed Amazon's lead this year, as the percentage of shoppers who used it for online grocery increased 11.9% from last year compared with Amazon's, which rose 3%.Furthermore, while Amazon is the leader by number of shoppers, it falls behind regarding how much of their grocery budget customers spend online: Only 26% of Amazon shoppers said they do “some,” “most,” or “all or almost all” of their grocery shopping online. This contrasts with the approximately 35% seen by grocery competitors Walmart, Target, and Kroger.Here's what it means: The fact that Walmart is creeping up on Amazon suggests that the extended reach it enjoys from its store network is helping amplify its online grocery prowess.Amazon is woefully outgunned compared with Walmart when it comes to its physical grocery store footprint. Whole Foods has just over 460 US locations — an order of magnitude smaller than the 5,362 locations boasted by Walmart.Furthermore, Walmart has announced that it's on track to offer grocery pickup from 3,100 stores and same-day grocery delivery from 3,100 stores by the end of 2019, covering 80% and 50% of the US population, respectively. This is a level of coverage that Amazon simply can't meet at the moment, and if Walmart can continue to rapidly press this advantage, it could further tighten the race with Amazon in the near future.The bigger picture: Going forward, Amazon's Prime members will be critical to helping the e-tailer maintain a lead in online grocery.Walmart is already beating Amazon among non-Prime members. While 45.1% of non-Prime member digital grocery shoppers have bought groceries online from Walmart in the past 12 months, only 44.1% say they have shopped Amazon. And though Amazon dominates among Prime members as expected (68.2% have shopped Amazon for groceries in the last year), if Walmart can expand its reach among consumers and become the default for nonmembers, it will limit how much Amazon can expand its share of the grocery market.Amazon needs to find ways to make its grocery offerings more attractive to existing and prospective Prime members.The e-tailer will always have the upper hand with Prime subscribers since there's some degree of loyalty established, and because it's a paid membership Amazon can afford to offer attractive services like Prime Now delivery at no extra cost. But Amazon likely wants to encompass all of Prime subscribers' grocery spending, and to do that — and to recruit new subscribers — it may need to expand its physical reach and its offerings so it can provide more items and services, making its reportedly forthcoming new grocery chain particularly importantInterested in getting the full story？ Here are two ways to get access: 1. Sign up for the E-Commerce Briefing to get it delivered to your inbox 6x a week. >> Get Started2. Subscribe to a Premium pass to Business Insider Intelligence and gain immediate access to the E-Commerce Briefing, plus more than 250 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now