by Kevin Coupe

TechCrunch reports that a new analysis from Second Measure suggests that Walmart continues to dominate the US online grocery business, offering “grocery pickup and delivery in nearly every U.S. state, and had 62% more customers in June than its next nearest rival.”

That “next nearest rival,” according to the research, isn’t Amazon, which it suggests has a strategy that may be confusing to customers.

Here’s how TechCrunch relays the research:

“The retailer is competing against itself by offering two services — Amazon Prime Now and AmazonFresh. The latter, an older service operated before Amazon’s Whole Foods acquisition, is actually one of the few online grocery businesses in decline, the report discovered … This June, AmazonFresh sales were down by 19% year-over-year — the worst sales change in the new research report, the analysts noted.

“Prime Now, on the other hand, is booming. Year-over-year sales nearly tripled in June. This is not only due to Whole Foods, whose assortment was added in February 2018, and is now a big driver for orders. Consumers also likely opt for Prime Now because it’s offered as part of their annual Amazon Prime subscription, while AmazonFresh is an additional $14.99 per month.”

That’s all interesting. I suspect even the folks at Amazon would acknowledge that their grocery-related efforts are a work in progress.

But what really fascinated me about this story was the company that the research defined as being Walmart’s “next nearest rival.”

Instacart.

The Second Measure analysis indicates that Instacart, in fact, “had 23% more customers in June than it had” in December 2018 when its relationship with Whole Foods (an early customer, until it was acquired by Amazon) ended.

In some ways, that doesn’t surprise me. Instacart has said publicly that Amazon’s acquisition of Whole Foods was terrific for its business, because it woke traditional retailers up to the potential of the Amazon threat.

But it ought to worry the retailers that got into bed with Instacart that it is the one being identified as the competition to Walmart. Not the retail brands that it supposedly represents.

Yet another indication, I think, of how big a threat Instacart is going to be to these retailers that it currently has as clients. When it starts opening dark stores of its own to serve shoppers so that it doesn’t need those retail clients, or creates its own-label brand of products, or uses the shopper data it has accumulated, or takes advantage of the fact that shoppers increasingly believe they are shopping at Instacart, not the retailers that it is supposed to be serving … well, I think these retailers are going to wake up one morning and realize that they have allowed an enormous, market share-eating Trojan horse to be rolled into their businesses.

It’s going to be an Eye-Opener. Unless some of these retailers open their eyes now.