Photo courtesy of Amazon
October 2, 2025
Is There Any Downside to Amazon Grocery?
In what could be an effective move into a clearly hot market, Amazon has introduced another private label product lineup — this time combining the former Happy Belly and Amazon Fresh labels into a unified Amazon Grocery brand.
According to a company press release, Amazon Grocery will be the name emblazoned on more than 1,000 food items rated four stars and above from the e-comm giant, with staples such as milk, olive oil, produce, meat, and seafood forming the bedrock of the brand’s inventory. Amazon Grocery-branded items will be made available through Amazon Fresh stores, and likely more importantly via Amazon.com.
“With Amazon Grocery, we’re simplifying how customers discover and shop our extensive private label food selection while maintaining the quality and value our customers expect and deserve,” Jason Buechel, VP of Amazon Worldwide Grocery Stores and CEO at Whole Foods Market, said.
“During a time when consumers are particularly price-conscious, Amazon Grocery delivers more than 1,000 quality grocery items across all categories that don’t compromise on quality or taste — from fresh food items to crave-worthy snacks and pantry essentials – all at low, competitive prices that help customers stretch their grocery budgets further,” Buechel added.
Amazon Sees Private Label Sales Growth and Joins the Game, But There’s a Potential Catch
According to internal data provided by Amazon, private label brands enjoyed a significant growth spurt over the course of last year — in 2024, the figures suggest, private labels a 15% lift in products sold across Amazon.com, Whole Foods Market, and Amazon Fresh.
That’s certainly enough encouragement for the company to consider doubling-down on its own brand, with existing labels such as Amazon Basics and, more recently, Amazon Saver.
It’s the latter that could cause at least a modicum of concern: Amazon Saver’s pitch is very similar to Amazon Grocery’s.
“The rollout of Amazon Grocery follows the September 2024 launch of Amazon Saver, which it calls a ‘no-frills’ grocery essentials brand with most items priced less than $5,” Chain Store Age editor Dan Berthiaume noted.
“The Amazon Saver assortment, which includes products such as crackers, cookies, canned fruit and condiments, is available in-store at Amazon Fresh and Whole Foods Market as well as online,” Berthiaume added.
While the potential for confusion may exist, the possibility of Amazon leaving the Saver name intact as a (perhaps ironic) no-name or value-oriented brand (at a sub ~$5 price point) exists — or the retailer may just fold the Saver label into the broader Amazon Grocery assortment.
Aside from any speculation, it appears that Amazon believes that the private label movement still has legs, and is moving in to leverage what gains are on the table.
Discussion Questions
Is there any potential downside to Amazon Grocery? If so, what can the company do to mitigate risks? If not, why not?
Will Amazon end up restructuring Amazon Saver to fold into Amazon Grocery, or is it preferable to keep both labels distinct and defined?
Have we reached peak private label, or does the movement still have room to grow?
Poll
Loading …BrainTrust
Doug Garnett
President, Protonik
Mark Self
President and CEO, Vector Textiles
Mohamed Amer, PhD
CEO & Strategic Board Advisor, Strategy Doctor
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Amazon’s previous private label grocery strategy was fragmented. Brands like Happy Belly failed to gain traction as they didn’t have much weight behind them in terms of SKUs, marketing, or visibility. An Amazon branded product is much more recognizable and has the halo effect of the trust people have in the Amazon brand – especially for everyday essentials. The downside is that Amazon has fewer credentials in grocery, so this will take time to reach its potential. That means consistency in execution is important – something Amazon can be bad at as it chops and changes a lot in grocery.
Yes, Amazon Grocery has potential downsides, but none that convincingly outweigh its upside—especially if Amazon manages execution. The main risks lie in grocery’s thin margins, consumer expectations around fresh quality, and Amazon’s relatively weak credentials in new categories. Consistency in execution is critical: supply chain hiccups, freshness failures, or stockouts could undercut consumer trust. But those are not insuperable challenges for a company with Amazon’s capital, logistics infrastructure, and data capabilities. By investing in cold-chain reliability, tighter quality controls, and local fulfillment optimization, Amazon can mitigate much of the downside.
On Amazon Saver: I tend to believe that over time it will be folded under the broader Amazon Grocery umbrella (even if the name lingers in some tiered capacity). Keeping distinct labels has brand segmentation benefits in the near term—Saver as a value tier vs. Amazon Grocery as a mainstream everyday line—but convergence makes sense for simplification, marketing efficiency, and clarity to consumers.
As for private label: no, I don’t think we’ve hit peak private label—in fact, Amazon is proving there’s still plenty of runway. Grocery private labels are still underrepresented in the U.S. relative to Europe, and consumer openness to store brands continues rising. A recent report notes private label growth has been steady and projections see room for more capture in the coming decade. Amazon’s integrated model (logistics, data, brand, margin control) makes it especially well-positioned to scale its private label efforts further.
I wouldn’t call it a downside, but, if we assume brands traditionally gained much of their growth through being physically displayed next to other brands, I wonder how well this carries over to an online market place; do people still try to do this by creating a virtual “shelf” when looking for new things, or do they just go with whatever is displayed first (or at least near the top)?
Amazon’s grocery execution track record is spotty. The real risk is its tendency to pivot midstream in categories that require sustained operational excellence. Regarding Amazon Saver versus Amazon Grocery, the company should maintain both. It’s classic good/better tiering with Saver signaling value and Grocery targeting mainstream; there’s room for both. The private label runway is nowhere near its peak; the U.S. still lags significantly behind Europe, and price-conscious consumers are accelerating adoption.
What’s missing here is that Amazon Grocery isn’t just competing with Kroger’s Simple Truth – it’s building agent-ready infrastructure for AI-mediated shopping. When consumer agents start automating routine replenishment (and they will), having a unified, trust-bearing brand becomes essential for algorithmic recommendations.
The real downside? If genuine consumer-controlled agents (as opposed to Amazon’s platform agents) gain traction, Amazon Grocery becomes a double-edged sword. An independent agent could easily say: “Amazon Grocery olive oil is decent, but Costco’s Kirkland is better for $2 more.” Suddenly, Amazon’s private label billions are arbitraged by consumer-controlled AI that optimizes across all retailers, not just within Amazon’s walled garden. Amazon is building infrastructure for the agent war AND betting it’ll control the agents.
The question listed here is whether there’s a downside for Amazon grocery. I think the most valid question is the opposite — is there really ANY serious upside for Amazon with grocery? Yes, they are desperate to show continued revenue growth but I see very little business value to Amazon other than extending their already depressingly long “infinite aisle.” Seems like a lot of work for them with little payout. There is not, in fact, any serious problem with existing grocery so they have little to offer customers.
Last year, Amazon earned >$100 billion in gross sales in grocery, excluding Whole Foods Market and Amazon Fresh. They’re already coming to our doorstep; now they’ll bring more affordable staples, so this figure will rise. Walmart is still the moose but Amazon will make gains in grocery.
That’s not possible as that would make grocery nearly 20% of their business. Did you, perhaps, mean million instead? That said, its unlikely that make any profit on those numbers — however they refuse to ever release useful reports so we can known the losses on retail-like products. Perhaps they don’t know, themselves.
It’s both true and possible. It is $100bn in gross merchandise sales (i.e. 3P + 1P and not just 1P sales), so you can’t take it as a proportion of the revenue line in their audited accounts. Also, important to note that their definition of grocery includes household essentials (i.e. cleaning, paper products, pet, some personal care, etc.) so it’s not just food and beverage.
Oh thank God. Felt the warm flush of embarrassment until I saw Neil got my back (and I quadruple-checked Andy Jassy’s quote).
One more thing:
Launching a private label line that meets this moment means Amazon earns revenue from both customers and CPG brand advertisers who spend on retail media to remain competitive.
I don’t see Amazon doing this if they didn’t think there’s decent upside. They’ve seen hard numbers. If they believe they can reach, say, 10%-20% of the sales in each category/set, its an effective overall brand communicator, and it results in increased profits. The key will be having an effective quality-price value equation to resonate with customers.
I disagree with them being oriented toward good upsides. Their grocery efforts have already dragged on long after they should have been abandoned.
The launch of the Amazon Grocery line is hardly a cutting-edge innovation. Rather it is in alignment with a broad trend across the supermarket industry toward “own-label” or “only here” product lines that feature and amplify the retailer’s banner.
The intent is to deliver very good quality and fairly-priced products that influence shoppers to return to that retailer when it’s time to replenish the pantry.
The well-documented PL programs at Aldi, Trader Joe’s and Costco are models for this. Their products’ brand identities are much clearer than the varied portfolio of labels previously offered by Amazon.
I was initially a bit confused about how a planned line of 1,000 Amazon Grocery products could already possess “four star and above” ratings, but it seems the company has selected high-rated items from its existing PL portfolio and re-labeled them. The press release indicates Amazon Grocery products will be positioned below Whole Foods’ natural and organic 365 line – and the packaging in the picture here certainly shows it.
For Amazon, this seems like a needed strategic step as it vies for a leadership position in the “harder-than-we-expected” grocery sector.
The promise behind Amazon Grocery is consistent with both their Leadership Principal around Customer Obsession and their flywheel towards lower prices, creating better customer experiences, more traffic, sellers and selection. If anything, the Amazon Grocery line is built for both an economic boom when there is less demand for value, and lean economic times when shoppers need more value options.
Private label has not only not peaked, but has much more upside for grocers everywhere. The scale of quality, taste, and value has nearly endless options and combinations depending the type of grocer you are – upscale, healthy, quality, middle of the road, convenience, low priced.
Private label still has room to grow, as consumers seek value and quality from retailers they already frequent and trust. Private label share in European countries (Switzerland, The Netherlands, Spain, Portugal, UK, Austria) ranges from 44% to 52%, whereas the U.S. share was 20.7% in 2023.
Beyond affordability, some consumers may switch from national brands to private labels as a backlash, as years of shrinkflation have eroded brand trust.
We have most certainly not peaked in private label. To the contrary, well-executed private label programs will continue to grow and thrive – retailers like the brand equity, loyalty, and margins they bring. Consumers appreciate the value.
That said, well executed is key. The best private label programs are laser-focused on their value proposition. Consumers understand what the brand stands for. The problem is when their brands are positioned in a way that’s confusing to the consumer. This is something Amazon needs to consider very closely. What does each brand stand for, and why would a consumer pick one over another?
I’m thinking back to the launch of Amazon’s private label clothing line & how it was supposed to be an inevitable juggernaut. I ordered a couple polo shirts because the price was good, and I wear them only when I have absolutely nothing else in the closet because the execution was horrible. With the explosion of slop on Amazon’s pages, and the 1980s-generic-food vibe from the packaging shown, it seems clear the focus on quality just isn’t there anymore, so why would I trust them in something I’m eating?
My first question in reading the headline was a cross between “does the world need another budget grocery option” and “Why Amazon?” Basically its an opening price brand for their existing grocery brands. OK. Basic retail practice.
Since Amazon purchased Whole Foods (WF) the WF shopping experience has deteriorated noticeably. Prices are more competitive (a good thing of course) however the front of most stores have turned into warehouses, with personal shoppers frequently vying for aisle space and overall selection / merchandising becoming less diverse.
WF’s 365 label brands, however offer good quality at competitive prices, so I am more optimistic about private label success than I am about Amazon becoming fun place to shop. As always, time will tell!
My first reaction was that the downside belongs to every other grocer out there trying to protect their market share. My thought was that Amazon is building its version of Costco’s “Kirkland” brand, probably the best proprietary brand out there. Just absolutely superior price/value metrics. Amazon wants that same “go-to” default thinking for its own menu of products, especially when it comes to highly predictable replenishment items.
Then I read Mohamed Amer’s comment. “…it’s building agent-ready infrastructure for AI-mediated shopping…” Wow. Of course. Agent driven shopping will shake up the rule book like few things ever have. And Amazon is making sure they will be a lead player, not just a conduit for selling everybody else’s products.
Amazon’s “go-to” default model is their entire strategy…for everything they do.