Amazon bought Whole Foods and investors, speculators, consumers and the markets are freaking out. And with good reason. These two companies combined will not only make a formidable competitor, they will change the face of grocery shopping for good. Unsurprisingly, there’s far more to be excited about than cheaper prices and a checkout-free experience. The way we shop for produce is set to seismically shift; redefining our relationship with one of the most universal routines of modern living. So what can we expect from this merger?
1. Less Floor Space, More Warehousing
Buying Whole Foods was an immensely strategic decision to help Amazon improve its distribution and delivery model. Existing Whole Foods locations will likely become smaller, with parts of the store converted to warehousing facilities to make delivery even faster and more seamless. Amazon has already given us unrealistic delivery expectations (we get what we want, when we want it) and the same will happen for grocery items. Prime Now (Amazon’s food delivery business) can now leverage Whole Foods footprint, making grocery delivery faster, and waiting windows even tighter. It’s not unimaginable that they foray into the restaurant delivery business soon after this venture.
2. Cheaper Prices, Smarter Purchases
The cost of goods, in particular organic produce, is likely to come down. Amazon Prime Memberships are set to surge, as only 62 percent of Whole Foods shoppers are currently Prime members. This boost to their consumer base will help give Amazon the scale to bring costs down. Additionally, intelligent algorithms will help purchases get smarter and reduce the criteria of choice to price. Even today, Amazon serves up recommendations for your weekly shop, based on your preferences and order history. For low-interest items especially, you will not even have to browse through a sea of seemingly parity products. This could spell trouble for brands that fight hard to make sure price is not the only criteria for choice. A combination of both algorithms and scale will drive down prices even further, and potentially eliminate brands without a tangible and compelling product differentiator.
3. Luxurious Spaces, Showroom Feel
As the need to physically go inside a grocery store increasingly dwindles, the stores will become more like showrooms, museums and education centers. Imagine a grocery store where you could see the latest food trends, trial new products and even watch cooking classes and learn about new dishes? As Amazon is already in the entertainment business, this does not feel like a stretch. These ‘Grocery Showrooms’ could be a place for up and coming brands to sample their products, and become a live-test to determine whether the brand will be stocked. Think of it as an interactive SharkTank for produce, where shoppers don’t just watch, they help vote.
4. ‘Click & Collect’ Drive-Thru
More online purchases will give rise to a more streamlined ‘Click & Collect’ experience. Square footage traditionally used for car parks, or the store itself will likely be converted to make space for a ‘Click & Collect Drive-Thru’. Imagine buying your groceries online, nominating a time convenient for you to collect them, and scooping them up on your way home from work? You don’t even need to leave the car.
5. Integrated Health Systems
Up until now, critics have dismissed Amazon’s attempts to get into the very lucrative space of pharmaceuticals as improbable. The acquisition of Whole Foods is a definitive first step into the world of Over-The-Counter Pharmaceuticals. This means that eventually, Amazon will not only take on traditional grocers, but also companies like CVS and Walgreens. And the more data they collect on our eating, spending and shopping habits, the more readily they can intervene in our health and wellbeing. This could improve health outcomes and curb health problems we didn’t even know we were developing. Based off your grocery shopping data, Amazon could theoretically point to what supplements you were lacking, what quite simply point to ways to improve your well-being, in ways that aligned with your goals and lifestyle.
