Why Amazon’s buyout of Whole Foods is ultimately good news for consumers
When Amazon closed the $13.7 billion deal to acquire Whole Foods last week, we witnessed a lot of hand-wringing and scrambling on Wall Street immediately following. Major grocery store chains’ saw dramatic drops in their stocks in response.
While the news fueled fears about a retail monopoly, the reality is that this move is likely to benefit consumers in the long-run. As the subscription economy continues to grow, companies will be most successful when they can leverage financial innovation to increase consumer access to a broad suite of services. If customers can get everything they need in one place and enjoy a consistent, delightful experience, why wouldn’t they?
The more Amazon adds to Prime, the more stickiness it builds into its business. The subscription economy is flooded with specialized services, each with their own payment methods and delivery options.
Subscription services should go broad or go home
More than 2,000 subscription services exist in the US alone. The average consumer receives around 12 boxes a month from different services. With so much choice, the more a company can broaden its product offerings under one subscription plan, the more likely it will succeed. Customers become raving fans when they can expect a reliable experience for multiple services from one company, whether it’s buying new clothes to watching their favorite shows and receiving groceries.
With the full lineup of Whole Foods stores now at its disposal, Amazon can improve its Prime service with more fresh items available for purchase and faster delivery windows. Amazon also gets the added bonus of Whole Foods’ loyal customer base, who are willing to pay extra for high-quality organics and locally sourced ingredients.
Not stopping with fresh groceries, Amazon also recently announced plans for Prime Wardrobe, currently in its testing phase. It will perform the same functions as popular clothing box services Stitch Fix and TrunkClub; Prime members can try out items from high-end designers and will only be charged for what they end up keeping.
A thriving subscription economy champions customer convenience
The subscription model has disrupted the retail market, and considering the pace at which it is growing, it is likely to become the standard economic model. As industries and companies consider adopting a subscription service, they’ll need to make sure they are putting the needs of the customer first.
At Inspire, we believe that the next frontier for the subscription model is moving into the smart home. This disaggregated space is begging for a business model to pull everything together.