Following Monday’s official merger of Amazon and Whole Foods, we’re still grasping the full breadth of changes coming down the line for both retailers. And so is the competition. After a rough month of August for the online giant’s stock, prices bounced back this week as news about upcoming Prime members perks and other changes were announced.
Amazon’s always had a long-term eye on integrating groceries and food delivery into its constantly expanding services. Its acquisition of Whole Foods is just the beginning of what’s likely to turn the industry upside down.
Since Monday, Amazon has added hundreds of new products from Whole Foods to its Prime Pantry online inventory. Some of those new SKUs are restricted to AmazonFresh shoppers, however. A service that’s slowly rolling out across the country and is currently available in over 20 cities.
But don’t expect to see delivery of perishable groceries anytime soon. The packaging required for delivering fresh items, cold meats and warm food are very cost prohibitive, quickly eating into any profits due to the required fast delivery times. That’s why building out the type of infrastructure seen in Amazon’s beta Go grocery store is more likely to be seen in 2018. Open to Amazon employees only at this time, the small storefront located at the bottom of its headquarters offers shoppers a walk-in and walk-out experience with true contactless payment. Retrofitting brick-and-mortar Whole Foods locations will take time, as the idea is still in its infancy.
Amazon previously promised that it would soon begin expanding its inventory of non-perishable goods in the coming weeks. We have spotted the official Whole Foods storefront at Amazon but it’s empty at this point. As last week’s news revealed, you can expect to see the in-house 365 brand hit online shelves by the end of the year.
As the Wall Street Journal notes, Amazon has plenty of competition in this space. Walmart recently rolled out special discounts when electing for in-store pickup, in addition to curbside services for groceries. Midwest favorite Kroger also offers the same service. That’s on top of startups like Instacart and FreshDirect that are also bringing similar ideas to market in urban areas.
Amazon’s biggest strength remains familiarity. Shoppers are comfortable with Amazon and as one of the largest players in online retail, it already has access to millions of shoppers and their data. Only time will tell how Whole Foods will evolve following its recent change in ownership, however we’re all but guaranteed that a ripple effect will hit grocers across the country.
Source: Wall Street Journal