SEATTLE — Amazon.com has moved quickly to transform Whole Foods Market, cutting prices on popular items by up to 43% in an effort to end the natural grocer’s “whole paycheck” reputation for expensive offerings.
Amazon’s $13.7 billion acquisition of Whole Foods closed on August 28, five days after the Federal Trade Commission approved the deal and the supermarketers’ shareholders voted to accept the buyout.
Prices were immediately slashed on organic bananas, salmon, organic large brown eggs and ground beef, among other products.
Amazon also revealed details about how it intends to integrate its Prime membership program into the Whole Foods’ checkout process, giving Prime members special savings and in-store benefits.
“We’re determined to make healthy and organic food affordable for everyone,” said Jeff Wilke, chief executive officer of Amazon Worldwide Consumer. “Everybody should be able to eat Whole Foods Market quality — we will lower prices without compromising Whole Foods Market’s long-held commitment to the highest standards.”
John Mackey, Whole Foods cofounder and CEO, said, “By working together with Amazon and integrating in several key areas, we can lower prices and … reach more people with Whole Foods Market’s high-quality, natural and organic food. As part of our commitment to quality, we’ll continue to expand our efforts to support and promote local products and suppliers. We can’t wait to start showing customers what’s possible when Whole Foods Market and Amazon innovate together.”
The acquisition has also made Whole Foods’ private label products — including 365 Everyday Value, Whole Foods Market, Whole Paws and Whole Catch — available through Amazon.com, AmazonFresh, Prime Pantry and Prime Now.
Amazon Lockers in selected Whole Foods stores will allow customers to have products shipped from Amazon.com to the stores for pickup or send back returns.
In another sign of the companies’ integration, Amazon’s Echo and smaller Echo Dot hands-free smart speakers were juxtaposed with the produce at the Whole Foods in downtown Los Angeles at prices of $99.99 and $44.99, respectively. The speakers sell for the same price on Amazon.com.
Market research firm Packaged Facts Inc. said that with the Whole Foods takeover and expansion of AmazonFresh, there’s little doubt that food and beverage e-commerce will receive a shot of adrenaline. The firm forecasts Amazon’s online food and beverages sales will rise from an estimated $1.5 billion in 2016 to $2.3 billion this year, giving it a 19% share of the online market. Looking ahead, growth of 70% during 2018 and 2019 is realistic, as Amazon pivots to leverage Whole Foods into multichannel growth. Longer term, even average growth would catapult Amazon’s food and beverages sales well past $30 billion.
“Will Amazon overtake the food and beverage market? No, but perhaps most importantly, Amazon’s major foray into food will surely stretch margins in an industry where they are already notoriously thin,” said Packaged Facts research director David Sprinkle.