Amazon made deep price cuts on Whole Foods items the moment it fulfilled the acquisition of the organic food chain. The price cuts were as much as 43 percent on premium items. Since the Amazon acquisition of Whole Foods, there has been a disruption in the market—with food chain rivals experiencing price drops on their stocks.
Whole Foods was initially trying hard to compete with stores like Kroger and Wal-Mart. These bigger chains started to sell organic produce at a lower price. Additionally, these chains continued to give price cuts, thus leaving Whole Foods with overpriced products. The phenomenon that was the Amazon acquisition of Whole Foods gave new life to Whole Foods. Since the price cuts, there has been an increase of up to 25 percent on customer traffic according to Foursquare Labs.
Details Related to the Amazon Acquisition of Whole Foods
Foursquare Labs used data from shoppers’ mobile devices to compare the week-on-week volume of human traffic to Whole Foods. There was agreement that some of the customers went to Amazon for the hype. Some of the shoppers still made purchases even if the items in the store were comparatively more expensive than those same items found in larger chain retailers.
In point of fact, Amazon is an online marketing company and has not had much success in brick-and-mortar operations. The $13.7 billion Amazon acquisition of Whole Foods represents a small toehold on the retail food market. Whole Foods represents only 2 percent of the $800 billion- market, which is currently dominated by Wal-Mart, Kroger and Albertsons. Notably, the prices at large chain retailers are still lower than at Whole Foods. Some Whole Foods items can be more expensive by 50 percent compared to large chain stores.
Can Amazon Save Whole Foods?
Amazon’s strategy with the whole Amazon acquisition of Whole Foods seems to be more of an extension or an arm of the company while maintaining its organic foods identity. Along with the cut in prices of some Premium items, Amazon is offering discounts at Whole Foods stores to Prime program members. Private label Whole Foods items will soon be available online through Amazon. It has also started selling Amazon Echo and Echo Dot at a discounted promo offer at Whole Foods.
Even before the Amazon acquisition of Whole Foods, the Amazon Go store was introduced to the public. (Amazon Go is a new concept in retail which features a new customer experience: you do not need to pay at the check counter—you can just leave the store when you are through with your purchases. Whenever you pick up an item and place it into your cart or basket, sensors and cameras will detect this and add it to your purchases. When you leave the store, the total purchases will be billed to the credit card on your Amazon account.) There have been comments that Amazon Go could be the blueprint or the direction for Whole Foods.
On the Future of Whole Foods with Amazon
Certainly, Whole Foods has loyal fans who regularly go to the store to have breakfast or buy food items. These are premium clients who buy a small number of items and remain happy with their purchases. Because of the Amazon acquisition of Whole Foods deal, the availability of an Amazon Go payment method in a Whole Foods store would add to that innovative user experience and leave a bold impact on consumers.
Amazon’s innovations with Whole Foods could completely upend the retail foods industry. Clearly, Amazon is correcting some of Whole Foods’ missteps—such as their failure to recognize that as organic became ubiquitous, pricing competition had to be taken into account. If Amazon can deliver lower prices for premium quality through Whole Foods, both companies stand to make a bold impact.
