Amazon.com Inc. closed its $13.7 billion dollar purchase of Whole Foods Markets today, and the 2017 Walker Sands Future of Retail Study has provided some insights into how the industry giant will be running the organic grocer.
The report points to three specific insights: Amazon’s customer base will explode; Amazon is solving the two largest barriers for online grocery; and Amazon will capture the millennial dollar.
“With the Amazon acquisition, Whole Foods has become an omni-channel business overnight,” Greg Ng, vice president of digital engagement at PointSource, told ITBusiness.ca. “The Whole Foods digital experience will be transformed by Amazon’s technology, enabling customers to shop and receive their favorite products in entirely new ways. Everything from quick mobile purchases to restocking items through Alexa capabilities will create a more seamless and complete user experience.”
The Future of Retail Study estimates that of the U.S. consumers surveyed, 84 per cent have already made a purchase on Amazon in the past year. Roughly half of those consumers are then also already Amazon Prime members. The study found that grocery services such as Amazon Pantry, AmazonFresh, and Amazon Dash aren’t widely used, but predicts that it is likely to change with this acquisition.
The primary reason for that prediction emerges from the thought that Amazon is solving the two largest barriers for online grocery. The study highlights reservations such as online shopping including the cost of delivery, and a distrust of product freshness. Amazon is tackling these concerns with Amazon Lockers within Whole Foods locations that would eliminate this delivery cost while still saving time on shopping. Likewise, it is banking on Whole Foods reputation of fresh and high quality food to tackle any distrust.
“As Amazon and Whole Foods continue to build out their offerings with convenient options such as Amazon Lockers and Prime Loyalty, we could see the gap between digital and brick-and-mortar close in the supply chain as well,” added Ng.
Amazon slashing Whole Foods pricing will go a long way as well. Those price cuts began immediately on Monday when the purchase closed. This includes Canada, which ITBusiness.ca confirmed at our local Whole Foods in Toronto.
This leads into the final insight provided by the Future of Retail Study, indicating that Amazon will capture the millennial dollar with Whole Foods in its lineup. It points to the fact that of those millennials surveyed, a fifth of them already prefer to purchase groceries online, with 39 per cent who do not purchase groceries online stating that they are extremely likely to over the next year.
For more on Amazon and its foray into the grocery business, you can check out the full 2017 Walker Sands Future of Retail Study here.