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Can Amazon Prime Day sell cereal and cod?

By Spencer Soper and Craig Giammona, Bloomberg
Published: July 15, 2018, 6:05am

Amazon.com proved it can use bargain buzz to sell a lot of gadgets on a random day in July. This year, it’s hoping excitement around Prime Day gets shoppers to change how they buy groceries.

Amazon’s fourth annual Prime Day — 36 hours of sales beginning Monday — will be its first since closing the $13.7 billion purchase of Whole Foods Market. It is offering discounted strawberries, chicken breasts and cod fillets to lure people into its brick-and-mortar stores, as well as enticements to get them to try grocery delivery for the first time.

Success for Amazon will be measured by how many people switch up their routines in response to the promotion and develop new habits. The $800 billion grocery market has been hard for Amazon to crack since so many shoppers already make weekly trips to supermarkets and big-box stores. Retailers have also stepped up their own digital offerings, including a buy-online-pick-up-in-store option that combines the ease of online shopping with the instant gratification of a quick run to the nearby market.

“They’re unlikely to lure a customer away, but maybe they can take a bit of the spending,” said Jennifer Bartashus, a retail analyst at Bloomberg Intelligence. “Your average Kroger shopper isn’t going to meaningfully change their shopping pattern based on being a Prime member. It takes a long time to change those habits.”

Amazon had grocery sales of $2 billion in 2017, representing 18 percent of the online market in the U.S., according to One Click Retail estimates. That’s a tiny fraction of overall grocery spending, but Amazon proved with books and electronics how quickly habits can change. Online grocery sales will grow to $100 billion as soon as 2022, with 70 percent of households ordering groceries online, according to the Food Marketing Institute and Nielsen.

That’s why Amazon is promoting so many grocery offerings on Prime Day, trying to extend the loyalty of 100 million global Prime members to the food aisle. Prime members, Amazon’s most active shoppers, pay monthly or annual fees for discounts and services.

After a decade of trying to sell fresh food online, Amazon it’s offering Prime members $10 to spend online during Prime Day if buy at least $10 of groceries at a Whole Foods store July 11 to 17. Shoppers using Prime Pantry, a subscription service for bulk grocery orders, can get a free box of Honey Nut Cheerios through a joint Prime Day offer from Amazon and General Mills Inc.

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