Now that Jeff Bezos has ordered himself a few billion dollars’ worth of groceries with the purchase of Whole Foods, everyone is wondering what Amazon will do with the 465 stores it will soon own — not to mention.
We already know from Amazon’s announcement last week that Whole Foods stores will continue to operate under their own brand, and will keep sourcing products from “trusted vendors and partners around the world.” But a few other things might change eventually, as Amazon seeks to change its new spouse’s reputation for pricey products.
It’s no secret that Whole Foods has struggled with its expensive image, aptly captured in its “Whole Paycheck” nickname. With intense competition in the grocery industry from discount European chains like Lidl and Aldi entering the arena, Amazon will be working hard to beat competitors on prices.
Amazon is notorious among retailers for being willing to make little or no profit on some items with the hope that customers will then spend that saved money on higher-margin products. The company has also made it increasingly easy for its users to go into just about any store, scan a barcode and compare that retailer’s prices to Amazon’s.
Which is why it’s curious, notes the Washington Post, that Amazon has patented something called the “Physical Store Online Shopping Control” [PDF], a system that’s designed to make it harder for shoppers in physical stores to compare prices online.
Yes, the company that climbed its way to the top on the back of “show-rooming” — when customers in a bricks-and-mortar store go online while shopping in order to compare prices — now may try to prevent that from happening. If Amazon decides to deploy this kind of tech, it’s likely that it would use it in Whole Foods stores as well as its own physical stores.
The In-Store Experience
Amazon has been working on changing the way customers shop for groceries, with efforts like its checkoutless AmazonGo store — which has been delayed while the company smoothes out technological issues.
It could roll out this cashier-less experience in its Whole Foods locations as well, freeing up employees to help shoppers in the aisles.
That kind of cashier-less technology could help Amazon reduce its headcount as well, as Bloomberg cites an insider who says the company will be looking to cut staff to help save money on labor costs.
However, an Amazon spokesman told Bloomberg that said the company has “no plans to use no-checkout technology to automate the jobs of cashiers at Whole Foods and no job reductions are planned.”
Amazon may introduce its own private-label products to replace more expensive items, an insider told Bloomberg. Whole Foods has also been pushing private labels in order to compete on price, so this would give Amazon a solid base to work from in creating its own in-house food brands.
Ordering groceries online
Amazon has been desperately trying to break into the grocery business for some time, but that’s proven a difficult nut for the online mega-company to crack. They’ve tried AmazonFresh, Amazon Prime Pantry, and a bunch of other initiatives to get customers to order groceries online, but it’s been slow going. In May, Amazon opened two grocery-pickup stores for the public to use.
Meanwhile, Whole Foods has a partnership with Instacart, a company that uses “shoppers” who pick up items in stores for customers who have ordered groceries online. According to insiders, about 10% of Instacart’s business currently comes from Whole Foods orders, but that seems likely to change. It’s expected that Amazon will integrate Whole Foods’ inventory and online ordering into grocery services like AmazonFresh and Prime Pantry.
When Consumerist asked Instacart how the news of Amazon’s acquisition of Whole Foods could affect the company’s current relationship with the grocer, a spokesperson told Consumerist that Instacart has been “committed to helping grocers compete online” from the beginning.
“That’s more important than ever given Amazon just declared war on every supermarket and corner store in America,” the spokesperson said. “We already work with over 160 retailers across the country and look forward to partnering with many more.”
In the meantime, Amazon Prime customers may start to see Whole Foods products in the AmazonFresh lineup, including the grocers’ prepackaged meals, which make up about 20% of Whole Foods’ sales now, Brad Stone, author of The Everything Store: Jeff Bezos and the Age of Amazon, and a senior executive editor for technology at Bloomberg News told our siblings at Consumer Reports.
“The goal of all of this is to make it easier to buy,” he says.