Amazon Swallows Whole Foods

We’ve seen the stories about Amazon’s purchase of Whole Foods and the many speculations for the reasons behind this decision. The big ones are customer data, distribution, logistics, and more consumer touchpoints, but there are others.

Physical Contact

There are things that people like to touch. Produce is a big one. There are things people like to browse, such as bookshelves. And many people want to try on clothing before buying so they can see how things fit and look.

Amazon has already tiptoed into retail with physical bookstores for people who enjoy seeing and handling books in person. They plan to open hundreds more. Their new apparel program, Prime Wardrobe, will provide an enhanced try-before-you-buy experience. Amazon will ship up to 15 items of clothing; shoppers pay only for the items they keep, and return the rest free.

Newton’s Third Law of Motion, or Push and Pull

Most agree that as brick-and-mortar companies push into online, online sellers see the need to push back. Walmart, the biggest grocery store, increases its online presence; Amazon buys 450 grocery stores.

Which Are You?

People who are price-driven  see Whole Foods as elitist. People who place quality above prices see Whole Foods as purveyors of top-quality produce, deli items, and prepared foods. Whole Foods also appeals to people who would rather buy gourmet items than commodities. I may like cheap grape jelly; you may prefer fruit-rich preserves. You may like Wonder Bread; I may like hearty fresh-baked breads. Some prefer their ketchup with more tomatoes and less water, salt, and sugar.

Socioeconomic Status

A Piper-Jaffray survey says Amazon Prime members skew towards the higher income brackets. It makes sense, because those who buy lots of things get the most value from a Prime membership. Whole Foods customers are higher-income, too. Which is why their stores are in higher-income areas. Which, by the way, are the same neighborhoods where many of those Prime members live.

Amazon Go 

Openings of their cashierless grocery stores have been delayed due to the inability of the technology to function flawlessly. Given their abilities, Amazon is likely to sort this out at some point, certainly with jars, cans, and boxes of foodstuffs. But measuring grapes and bananas and pomegranates is much harder, so these problems may take longer to solve. Whole Foods might be the bridge.

Any way you look it at it, it will be interesting to watch what happens.

Click here to see the short story of Keedoozle, the first automated grocery.