Amazon makes Whole Foods, Prime Now move: Industry reaction
Amazon has greenlighted the first major integration between its e-commerce operations and the acquisition of Whole Foods. It is introducing a free two-hour delivery of products through Prime Now (delivery within one hour is available for $7.99 on orders of $35 or more) with plans to expand across the US in 2018.
Retail Technology Innovation Hub brings you an industry reaction round-up…
Greg Ng, VP of Digital Engagement, PointSource: “This announcement further supports the idea that this bricks and mortar network of Whole Foods is not only a great way to deliver fresh food, but by using Prime Now, could also serve as a distribution centre for other common Prime Now products. One of the most exciting things is the potential of adding the Alexa-enabled appliances to the mix, as well as Amazon Key. The addition of AI into the analysation of food usage patterns can mean huge things along the supply chain. In theory, fewer product go bad sitting unpurchased in the store shelves or uneaten in your fridge."
Andrew Park, Sr. Director, CX Strategy, InMoment: "Amazon will have full control over the end-to-end customer experience. This gives them a big leg up over other delivery providers that often experience a disconnect between their services and the source stores. Bricks and mortar grocery brands have attempted to launch their own delivery programmes, but Prime's proven ability to execute consistently could be the tipping point to the adoption of online grocery.”
Scott Webb, President, Avionos: “This speaks to how the company is driving the convergence of physical and digital experiences to further meet the needs of their customers. As we recently saw with Amazon Go, Amazon is always looking for ways to add new seamless experiences to engage customers and this is another perfect example of how they're doing so, while streamlining the delivery of perishable goods. Over the next few months, we can expect to see Amazon employ their test and learn philosophy to see how this new addition of services impacts their customers and how they can continue to refine and improve that process."
Rupal Karia, Managing Director - Commercial Sector, Fujitsu: “For many years, Amazon has sought to provide the best in consumer convenience, with its ever-faster delivery service and wide product offering. Now, the company is looking to set new standards in grocery delivery. Amazon’s Whole Foods acquisition married the company’s online expertise with the grocer’s physical presence, and now Amazon is bringing the best of its fast-track delivery service to the grocery sector, by delivering products within one to two hours. This provides consumers with what they value above everything else – freedom to choose the channel that most suits their needs, be that physical or online.
This is something that other retailers must seek to mirror. Our recent study highlighted that that 8-in-10 consumers would spend more with retailers that have a better technology offering. With many consumers prioritising flexibility even over cost, grocery retailers have a great opportunity to capture consumer loyalty and increase their revenues – but only if they can offer the up-to-date technology experience that customers want.”
Hugh Fletcher, Global Head of Consultancy and Innovation, Salmon: “Ever since Amazon introduced Amazon Fresh, it has had its sights firmly set on the grocery market. This makes a lot of sense when you think that Amazon accounts for 37% of all online retail sales in the UK, and 57% in America. This announcement shouldn’t come as a surprise, as it’s the most logical step following the company’s acquisition of Whole Foods and the next step in connecting its grocery offering. Utilising Prime to push this super-quick delivery service further underlines the benefits of its CRM programme, bringing the customers closer to Amazon, and making them more accustomed to locked in subscription models – further reducing the need and inclination to shop elsewhere. Prime now provides an almost unparalleled service that digitally-native customers expect, driven by convenience, flexibility and, most importantly, immediacy. As consumers, we are all becoming familiar with and expectant of a world where we do not have to wait for our favourite products and Amazon continues to consistently meet these traits.
Amazon’s intention when it acquired Whole Foods was quite clear - to secure a larger foothold in the grocery market, and of course to test its metal in the delivery of a truly joined up, omnichannel shopping experience. There is no hiding that Amazon is striving to own the entire retail sector, and revolutionising it through its ‘cross-channel data driven retailing’ strategy. It’s evident that a robust omnichannel strategy is essential for the future, for both pureplay and traditional retailers. Looking into the future, the grocery market will be transformed - physical interactions will change (such as Amazon Go), online ordering will be streamlined through voice assistants (Echo, Look and Spot), data will be passed seamlessly between channels and customer data will glue the whole experience together, following the customer whenever, wherever and through whatever interface they choose. Although omnichannel has long been around as a concept, we are finally starting to see the dawn of true omnichannel shopping, and it’s a dawn that’s being seen in by Amazon.”