The Amazon factor
Now that Amazon owns Whole Foods Market, not only will e-commerce grocery shopping proliferate, but the food complex as a whole will change. In 20 years, Amazon grew from a few people selling books out of a garage to an online conglomerate generating annual revenue just short of $1.36 billion.
As it has done in other retail categories, Amazon is expected to pressure its grocery competitors to lower prices. This includes food/meat with organic and other attributes. Amazon has already begun leveraging its buying power and efficiencies to reduce the costs of organic (and other) food products, making them more available and appealing to more consumers. Last July, Jeff Bezos, Amazon co-founder, met with cattlemen to discuss the expansion of the organic and grass-fed beef supply.
The online retailer’s opportunity to rate and review products, as well as compare prices, could further minimize price variability. The long-term impact could be continued consolidation in the grocery world, many analysts believe.
A significant reason why Amazon wanted Whole Foods was to broaden its grocery distribution channels. It already had Amazon Fresh but needed a way to get more grocery options to more people quicker. Selecting groceries online to be picked up at the store will become commonplace, an option that Wal-Mart expanded shortly after Amazon announced its $13.7 billion bid for Whole Foods. Then there’s the home-delivery prospect, which Amazon already dominates, as well as options to set up automatic, regularly scheduled deliveries.
But all of this won’t appeal to only tech-savvy millennials; rather, time-strapped shoppers of all ages will see and embrace the benefits. Service, personalization, convenience and the customer experience will dominate customer loyalty.
Posted on February 25, 2018