Amazon has a long history of dipping their toe into an industry and quickly revolutionizing it and taking it over. To an extent it’s their entire business model and is the exact reason their acquisition of Whole Foods has turned so many heads. It’s not just about buying a trendy new brand to add to their portfolio, that’s not how Amazon works. It’s all about revolutionizing the grocery store for a new generation of shoppers that spends more time online and increasingly less time in brick and mortar stores.
The elusive millennial market is right in the middle of Jeff Bezos’s crosshairs, not because of their spending power or sheer size, but because they’re on the edge of every transformation or disruption the internet has ushered in. Transforming grocery shopping will be the next wave millennials will find themselves riding if Bezos has anything to say about it.
Millennials already do the majority of their shopping online and a significant portion of that revenue already flows to Amazon. More importantly though Amazon has proved that once people start buying household items from them on the internet, they generally do not stop. Which is something the company plans to harness with Whole Foods in order to transform the way Americans shop for groceries. It’s probably no coincidence that Whole Foods also has the highest market share of millennials and affluent young professionals who also currently do a significant amount of their shopping with Amazon. Which means all they need to do is convince them to buy some groceries online while they are there anyway.
Instead of building a customer base from the outset, or relying on bringing some Amazon shoppers into their stores, they just bought the grocery store their customers already go to. That’s not the only reason Amazon was interested in Whole Foods, the trendy grocery chain also brings with it almost 500 physical locations in North America and a cold storage supply line that would be difficult for Amazon to build from the ground up. It also gives them an opportunity to roll out proprietary technology that seeks to change the in store shopping experience as well, in a way that would be incredibly difficult just using Amazon’s own select physical retail locations.
The prevalence of Whole Foods is an incredibly important piece to the puzzle that is revolutionizing grocery shopping. Whole Foods has already made inroads in almost every major market in the country. For grocery delivery to become a sustainable reality for Amazon they will depend on localized shipping centers that can easily store food items for long periods of time. Something that would have been a logistical nightmare should Amazon have decided to build their own grocery spin off from the ground up. Now they have at least one location in every major metropolitan area in the country and a few in Canada, all from the very beginning of their foray into the grocery world.
These locations, close to the very people who use Amazon anyway, will be the bread and butter of any grocery revolution, but they’ll also depend on Whole Foods frozen and refrigerated food supply chain, something Amazon needed desperately to make on demand groceries a reality. In certain areas their Prime Now service already delivers most household items, same day, free of charge, for members anyway. (And membership costs $299 dollars a year). PrimeNow also delivers certain grocery items, such as bread, cereal, beer wine, and most non perishables. Now with the frozen friendly supply lines and storage facilities Whole Foods can bring them, Amazon is looking to bring every grocery item imaginable right to would be shoppers doors.
It also allows Amazon to experiment with it’s highly publicized grocery store of the future. Amazon recently opened their first AmazonGo store in Seattle and when they unveiled the idea it was met with much fanfare. A store that used a high tech system of cameras and sensors to determine exactly what you place in your cart and charge you as you walk out the store. It takes the idea of a self checkout system to the next level. No checkout at all, but as pointed out by many at the time, those changes are not where their real money is. It’s in the technology they have created to make that system popular. Selling that off to stores all around the world will be the new pillar of Amazon’s empire and grocery shopping in general probably.
Wholefoods gives them one more opportunity to show that technology in action and swoop up anyone who wasn’t already buying their groceries online. It’s not shopping on the internet, but it’s an entire new level of convenience to the traditional shopping experience that is sure to attract a lot of customers. Customers that other places like Walmart or Kroger will probably have to go to Amazon for the technology required to steal them back.
Wholefoods and Amazon are a partnership bent on changing an entire industry. They’re bent on trying to upend American’s way of life. That has hppened a lot in the last decades and millennials have always been on the front line. This won’t be any different.