Amazon acquired Whole Foods on June 16 sending it's stock up and sending the stock for Krogers and Walmart down. What are some of the benefits of this that others are not talking about? My goal with this blog post is to talk about what Amazon gets out of this purchase and what Whole Foods gets out of this purchase. The grocery business is an $800 BILLION dollar business and Amazon to this point has not interrupted it. Well, I think that has changed with the acquisition of Whole Foods. Below are some ideas I have from the acquisition.
What does Amazon get from Whole Foods:
1) Amazon now has access to 430 Whole Foods locations across the United States. Could these turn into fulfillment centers for deliveries? This certainly adds to the Amazon real estate portfolio.
2) Amazon now has the opportunity to play around with their Amazon Go Technology. This technology allows customers to avoid lines and checkout by grabbing what they need and walking out of the store. Pretty fascinating software that would make convenience, Amazon's motto, enormous. No more standing behind some guy that takes forever while he pays for cash at the line.
3) With 430 Whole Foods stores across the country, I imagine Amazon is going to target doing pick ups in store. This could happen through refrigerator lockers or orders may be paid on Amazon.com and pickup at the store. My wife knows how much I HATE to go to the grocery store. I can never find where anything is, no matter how 'easy' it seems to be and it always takes me 20-30 minutes even to pick up a couple of items. Well, if lockers work with Whole Foods, my wife can order on her phone what she wants me to pickup and all I have to do is show up and pick it up in a locker. Imagine that? Convenience at it's finest. The cost of picking and packing the product doesn't currently happen because customers pick and pack themselves but with the Amazon Go technology and avoiding checkout clerks, these workers can now work on lockers. This could be one of many game-changers for Amazon.
4) Have you ever purchased fruits or vegetables from Amazon Fresh? They're usually not very good. They're either too ripe or not ripe enough and typically not as good as if you were go to go Albertsons or Kroger. The one thing that Whole Foods is great at is fruit and vegetables and sourcing these products from around the world. This will give access to Amazon to source their fruits and vegetables and improve their Amazon Fresh business.
5) Local brands? In Southern California where I live, there are many local curated brands that Amazon doesn't have access to. With the help of Whole Foods, this will change as Amazon will now be able to target these brands and potentially sell this on their website or through Amazon Now.
6) My family and I use HelloFresh each week and get three dinner meals that come. We love it! It's easy and fun to cook and allows me to eat healthier than going out to grab food or having to start from scratch on what to cook. Hello Fresh is one of many companies out there. Blue Apron was just valued at 3 billion dollars. I imagine that Amazon, through resources acquired through Whole Foods will now get into the Meal Kit business. If there is 3 billion of dollars for Blue Apron, why can't Amazon get in on that same product? Though very competitive, this is Amazon's world.
What does Whole Foods get?
1) Whole Foods immediately will have access to Amazon Fresh and Amazon Pantry to provide their products and attack a market they haven't had the ability to attack previously.
2) Whole Foods has used Instacart as their delivery network previously, but with Amazon they now have as robust of a delivery system as there is anywhere. They have access to a guess estimate of 65 million Amazon Prime members they can now target to use their hearty products to.
3) Amazon Go, as mentioned above will be a tremendous opportunity for the Whole Foods market. Think of the opportunity this can grow to.
4) Online Presence- Right now, Whole Foods has a minimal online presence. Working with the biggest online marketplace in the world will allow them to tremendously grow their online presence.
5) Amazon Basics- I imagine that in the next year or so, Whole Foods will probably have 40-50% of their products becoming a Whole Foods brand. The margins are higher and the opportunity is tremendous. Ever purchased batteries from Amazon? Well, Amazon Basics makes a strong argument that it is as good as any of it's competitors. Beware Proctor and Gamble.
6) International presence- Whole Foods currently has a small international customer base. With Amazon, they can now attack the international market as well as anyone. The four major markets I imagine will be Canada, Australia, New Zealand and Western Europe. Expect Whole Foods to grow in all of these markets.
7) Amazon Lockers- Delivering packages to customers is what Amazon does best. Amazon Lockers are growing in urban cities and I imagine they'll continue to grow with customers around the country.
Amazon continues to become a behemoth in the marketplace. Customers need to continue to educate themselves on how to maintain business as well as grow as Amazon continues it's trend to taking over many different industries.
Thanks for reading my blog. If you're interested in me helpign you with you with your eCommerce business, please reach out to me at Hunter@movemethod.com.
- Hunter Hartman
Hunter Hartman is an eCommerce shipping consultant located in Ladera Ranch, CA.
Hunter Hartman is a shipping consultant in the eCommerce world. He blogs about the changing landscape of shipping.