Prime has traditionally skewed toward more affluent households. Prime membership has been a highly effective way for Amazon to gain access to the upper income market. 1. Going deep into the upper income market Here is more insight into what this will involve. It is about leveraging its unique capabilities to focus on just the segment of its business where it can create profitable growth without having to make a major investment.Ī) The foundation of the strategy is the upper income market – the top 20-30% of the households where “time is more valuable than money.” Amazon Prime has already given the company a strong presence with these customers and Amazon knows about them and their shopping habits.ī) Amazon’s soon-to-open new chain of grocery stores will give the company two things: a brick & mortar presence in market areas where there’s a concentration of Prime members, and sites for micro-fulfillment centers.Ĭ) Amazon’s customer management skills will allow it to improve customer satisfaction while growing the profitability of each “store.”

Unlike most retailers, Amazon’s definition of winning is not about building a large market share. We expect Amazon to further implement this strategy in the next couple of months, so this is a good time to: 1) offer a high-level description of what we see happening, and 2) begin to consider the changes food retailers will need to make to survive and grow in response to this new, and inevitably more competitive environment. While the industry has been preoccupied with COVID-19 challenges, Amazon has continued to work hard on refining its three-prong strategy to win in grocery.

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