Amazon & Whole Foods: Six Months In

Peter Mayer Agency

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It seemed an awkward marriage, Amazon and Whole Foods, when it was first announced. One entity, slick and smooth — the largest internet-based retailer in the world known for its deals and fast deliveries. The other, elegant and ethical — a brick and mortar known as “America’s healthiest grocery store.”

A few of the changes you may have noticed in recent months:

Pricing

  • Price drops with some decreases at almost 40% on Whole Foods products
  • Amazon Prime becomes the Whole Foods Loyalty program (with discounts for members)

Products

  • Customers can buy Amazon Echo and Echo Dots in Whole Foods stores
  • Brand representatives are no longer allowed to visit and promote their products at Whole Foods stores
  • Local stores will no longer make the call on whether or not they sell certain regional products
  • Select Whole Foods products are now available on amazon.com (mostly through Amazon Fresh)

Practice

  • Amazon lockers are now in some Whole Foods stores (you can pick up your Amazon deliveries there)
  • Point-of-sale systems simplify buying Amazon brands at Whole Foods (and vice versa)

If you’re a consumer packaged goods brand watching this emerging relationship, how should you think about the future?

Amazon and Walmart are setting themselves up to be the big competitors in online grocery retail

If you don’t already have a relationship with one or the other, now is a good time to consider an introduction. Their efficiencies in logistics, warehousing and supply chains are only growing, meeting their customers’ busy-way-of-life needs.

Don’t give up on brick and mortar stores

Repackage or tier goods so that competing brick and mortar retailers can still make a profit. It will help motivate them to promote your brands. Direct-store-delivery (DSD) brands have an additional competitive advantage as they can claim a superior level of freshness which adds to the needs of the traditional grocer in the face of this new competition.

Find your complement

What’s powerful about the Amazon-Whole Foods relationship is the combination of two complementary forces. Whole Foods stands for earth-friendliness, supply chain purity and support of communities while Amazon brings stronger access and flexibility to the consumerism of grocery goods. Is there a complementary brand you, too, could partner with in some way?

For more Peter Mayer Food & Beverage Insights, click here.

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