Analyst: Amazon's Grocery Business Becoming 'Expensive Hobby' with Little Growth

Amazon’s grocery store business has cost it billions of dollars over the past 15 years and has yet to really cement its foothold in the retail space. Analysts are now referring to the business as Amazon’s most “expensive hobby.”

CNBC reports that Amazon has successfully dominated the online shopping industry for multiple decades, devoting its business model to delivering packages to customers’ doors in the fastest, cheapest way possible. Despite Jeff Bezos’ domination of e-commerce, one line of business the internet giant has poured its resources into has continued to avoid its relentless stranglehold — grocery shopping.

Customers shop at a Whole Foods Market, Monday, Aug. 28, 2017, in Tampa, Fla. (AP Photo/Chris O’Meara)

Amazon Go store (The Associated Press)

Amazon has a number of grocery-related services including Prime Now, Fresh, Go, and more. In 2017, the company purchased Whole Foods for $13.7 billion, more than 10 times the amount Amazon had paid in any previous acquisition.

But despite this, Amazon remains a small player in the grocery industry. Amazon.com and Whole Foods only account for a combined 2.4 percent of the grocery market over the past 12 months, while Walmart dominated the industry accounting for 18 percent, according to the research firm Numerator.

Jake Dollarhide, CEO of Longbow Asset Management, commented that “Amazon’s all about the cloud, e-commerce and entertainment,” which has acted as the company’s “core holding” since 2011. He added: “It’s almost like the grocery business is an expensive hobby.”

Shareholders did not appear worried about the industry as Amazon’s stock price soared almost 400 percent in the last five years with founder Jeff Bezos at the helm. But, since Bezos resigned from his position as CEO and Amazon cloud computing chief Andy Jassy took over, the situation has changed.

Jassy has been leading the firm since July, in this time company stock dropped by around 13 percent and was the worst performer out of all of the Big Tech firms last year, reporting its slowest growth rate for any quarter since 2001. A drop in performance may cause the company to reconsider its “expensive hobby” in the grocery business.

Read more at CNBC here.

Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship. Follow him on Twitter @LucasNolan or email him at [email protected]

*As an Amazon Associate I earn from qualifying purchases