The deal between Amazon and Whole Foods Market was announced in June. Deciding that competitors won’t be harmed and people will still have plenty of places to buy food, the Federal Trade Commission (FTC) blessed the merger in late August, according to Bloomberg. On the same day, Whole Foods Market shareholders approved the deal, Reuters reported.
Amazon announced that as of Monday, August 28, 2017, it owns Whole Foods, and is reducing prices on select best-selling foods. And it’s not by some measly margin either. In fact, prices in some cases were slashed by as much as 43 percent.
The official and immediate changes:
- Prices are dropping for organic avocados, organic brown eggs, organic salmon, almond butter, organic apples, and organic rotisserie chicken. More markdowns will come soon.
- Amazon Prime members will now receive additional discounts at Whole Foods stores.
- Amazon customers will be able to buy Whole Foods brand grocery products through Amazon’s Prime Now and Amazon.com.
- Amazon customers will soon be able to pick up or return items ordered on Amazon.com via lockers in an unspecified number of Whole Foods stores.
In response, Walmart and Google announced they are going to work together to enable Walmart customers to order products through Google Express and eventually via Google Home. But that might not be enough. A comparison of Whole Foods’ new prices post Amazon-acquisition showed that when it comes to organic products, Walmart is now the more expensive option. As Techcrunch noted, following Monday’s price cuts, Whole Foods offered cheaper prices on organic milk, almond butter, organic pasta sauce, and organic bananas. Plus, Whole Foods has a wider selection of organic products in general (you can’t find organic avocados, apples, baby kale, or almond milk at the super store).
What Amazon could do next
There are a lot of crazy ideas Amazon could try now that it owns a grocery store chain, and we couldn’t help but share a few fun ones we thought up. The following items are not based on any inside information or third-party verification. We also imagine the changes would come in stages, rather than all at once.
Prime member perks and some for non-members, too
Amazon loves its millions of Amazon Prime members (the exact number is not disclosed). On average, Prime members spend $1,300 annually on Amazon, while non-members spend an average $700 a year. We definitely expect even more perks for Prime members at Whole Foods stores.
Amazon could give Prime members special early or late opening hours just for them.
Easy and obvious perks could include special Prime member checkout lines and reserved parking spots. Amazon could give Prime members special early or late opening hours just for them and their guests. Thursday is historically the slowest day of the week for grocery stores. Perhaps Thursday will become Prime Member Day for members only. Prime members might also get early notification of hot sale items or special promotions.
Most grocery stores stock checkout aisles with high-margin impulse products like candy, magazines, and energy drinks. Whose brand do you think will be in checkout lines now? Amazon will load Whole Foods with new items and use machine learning to figure out which ones perform best.
Amazon will likely leverage the tie-in between Whole Foods Market stores and its online shopping site in multiple ways. The company now has a broadly distributed set of test beds in upscale areas for service experiments. Prime members and non-members alike may benefit as Amazon cranks up the learning curve to improve online shopping and buying beyond the delivery and return lockers already announced.
Alexa, add this to my grocery list
Alexa and Alexa-aware products and services will be firmly ensconced in Whole Foods Markets. We think Alexa will also play a major role in bridging the home-to-store experience.
Customers can expect an Alexa skill that creates shopping lists of recipe ingredients — or local Whole Foods store equivalents. Just tell Alexa what you want on the menu this week, and the voice assistant will use the data to create a shopping list. Amazon may also find a way for Alexa to monitor consumer staple goods preferences and usage levels and add those to the list as needed.
The next step could be for Alexa to create and send grocery shopping lists to Whole Foods stores, with emphasis on local store deals, discounts, and promotions. You should have to never worry about losing out on a BOGO (buy one get one) deal because the products are sold out. Tying Alexa into local store inventories could be one of its strongest benefits. If Amazon knows shoppers will want to buy more cabbage because it’s on their grocery list, it can supply more.
What if you get to the grocery store and forget your list? Accessing your list via the Alexa app on your phone or with in-store devices should remove that concern.
What if you’re in the store and suddenly realize you don’t know what’s in your refrigerator or pantry? Alexa could be a big help if you had Alexa-aware scanning devices in home food storage appliances. It may take a few years, but the smart pantry might actually become a reality.
Oh, the drones!
Whole Foods Market stores are already located in areas packed with Amazon Prime members. Amazon has experimented with drone delivery for several years. One of the biggest issues with last-mile drone delivery service — not counting drone haters with shotguns — remains the establishment of multiple distribution centers. Hello, Whole Foods locations. Imagine every Whole Foods’ flat roof top swarming with drones — taking off, landing, and lighting up the skies like it’s the Fourth of July. It could happen.
Things are going to change
We don’t really know what programs or services Amazon is cooking up for immediate or long-term implementation at Whole Foods stores. Chances are Amazon isn’t sure, either. The potential implications of Amazon’s Whole Foods Market merger are massive for the retail industry, though. For the first time, a major online retailer now owns brick-and-mortar stores. As Jeff Wilke, CEO of AmazonWorldwide Consumer noted: “We’re determined to make healthy and organic food affordable for everyone. Everybody should be able to eat Whole Foods Market quality – we will lower prices without compromising Whole Foods Market’s long-held commitment to the highest standards.”
John Mackey, Whole Foods’ CEO, echoed these sentiments, saying, “By working together with Amazon and integrating in several key areas, we can lower prices and double down on that mission, and reach more people with Whole Foods Market’s high-quality, natural and organic food. We can’t wait to start showing customers what’s possible when Whole Foods Market and Amazon innovate together.”
Update: After the Amazon acquisition, Whole Foods prices are in some cases cheaper than Walmart’s.
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