August 29, 2017
Yesterday, Amazon officially closed its acquisition of Whole Foods and, in its announcement, provided several hints of how it will attempt to bring the scale it brought to pure e-commerce into the omnichannel world. The most visible change, and the one that will receive the most attention, is Amazon’s decision to immediately slash prices on many organic food choices—a pricing strategy the Seattle-based giant used to dominate e-commerce. But the integration of its systems, which will happen in stages over time, will allow for other moves.
The company said it will integrate Amazon Prime with Whole Foods’ POS system, enabling Whole Foods loyalty programs and promotion through the popular Amazon Prime program. The company also indicated it will use many of Whole Foods’ 450 locations across the country as sites for Amazon Lockers, where Amazon’s online customers can pick up or return e-commerce orders.
And, while not included in the announcement, experts have predicted that Whole Foods could become a bigger test bed for Amazon’s Go concept—brick-and-mortar locations that use cameras, artificial intelligence and high-tech shelving combined with an app and card-not-present payments to enable shoppers to walk in, choose their items and walk out with payment automatically made through their Amazon accounts.
Walmart, with its recent partnership with Google and 4,500 locations in the U.S.—and others with more stores than Whole Foods and omnichannel ambitions—may have something to say about Amazon’s attempt to meld the physical and digital worlds. But, Amazon, which promised in the announcement to expand Whole Foods’ store footprint, has a history of making the competitive environment challenging for other merchants.