How Amazon Plans to Amazonify Whole Foods
Last February, some members of Amazon’s Prime subscription program were given the ability to order food and other items from Whole Foods and receive them within two hours. Customers would be required to spend at least $35 to receive this service, but that shouldn’t be too difficult for a store that goes by the name “Whole Paycheck.” If the amount does not come to $35, the customer will be charged $4.99. Someone who is experiencing a dinner party emergency can even have fresh produce delivered within one hour for the price of $7.99. This is even less than it would cost to hire Uber.
Amazon spent more money on Whole Foods than it has ever spent on any other purchase. The cost came to $14 billion, and several analysts recognized that it would benefit the company in the three following ways:
1. Amazon CEO Jeff Bezos would be “Amazonifying” Whole Foods while he reduces prices of items that most people want. He would also bring more people into the stores.
2. Whole Foods’ 400 stores are located in affluent areas, and they will serve as distribution centers for many products.
3. Amazon can try to transition Whole Foods into a retail company that operates online by making it possible for people to order food from their smartphones or their Amazon Echo smart speakers. Then, their fresh produce would arrive at their doorsteps just like other items they order from Amazon.
The analysts who made those predictions were correct. Amazon is now doing all three of the above-mentioned things. They have cut prices and turned Whole Foods stores into “on-demand food delivery services,” and it looks like this service is about to expand. After all, one study showed that services such as these are going to grow 15 times faster than the restaurant business over the next 10 years.
We have to remember that the afore-mentioned prediction is not set in stone. Whole Foods’ on-demand service could end up being a huge flop. In the past, Whole Foods has had difficulties implementing food delivery services. It had to discontinue its Amazon Fresh program in several cities in 2017. In the next six months, we could be hearing that Whole Foods workers are being overworked or that the produce arrived in less than perfect condition. It isn’t guaranteed that Amazon will be able to do everything perfectly.
Amazon’s ultimate goal is to be a company that operates within every aspect of society. That would mean that Prime would be a “life bundle” that creates a membership program that addresses every customer’s every need. Amazon will continue to seek out product opportunities, but it will also own the search engine by which customers will look for these products.
Now that Amazon’s Prime subscription has the on-demand Whole Foods option, Prime is much more valuable to customers. Amazon wanted that to happen because Prime subscribers will supposedly be Prime subscribers for life. That’s because as Amazon becomes the first place people buy books, soap, Nyquil and chicken breasts, it will also be the first place that people search for these things.
Where there is search volume, there is revenue. Amazon increased its ads on the internet by 60 percent last quarter, and it is expected to make $10 billion in ad revenue by the end of the year. Amazon’s competitors are suffering because every time Amazon enters a new market, competitor stock prices take a dive. Jeff Bezos’ ultimate goal is to create an environment where the first place people visit is Amazon, and he will offer them complete convenience for doing so.
More where this came from
This story is published in Noteworthy, where thousands come every day to learn about the people & ideas shaping the products we love.
Follow our publication to see more product & design stories featured by the Journal team.
