Amazon has succeeded in disrupting the grocery market with its takeover of Whole Foods. It is clever and, on the face of it, a match made in heaven. Whole Foods is a high-end, organic chain that has a reputation for fresh, quality produce. Amazon has a fairly wide range of reputations. But what it does do is online shopping and distribution, and it does them very well.
Amazon has moved fast and, on the first day of ownership of Whole Foods, slashed the price of some strategic products such as avocados and apples by a third. More discounts are to follow. Clearly, Amazon intends to do to the grocery market what it has successfully done to books and electronics. And the market obviously agrees, as shares in Whole Foods’ rivals continue to slide.
Another interesting point is that Amazon Echo devices immediately appeared on the shelves amongst those organic avocados and apples. The Echo is, of course, linked to Alexa, and guess what? Alexa can control parts of your home – and order shopping.
As Greg Ng, VP of Digital Engagement, PointSource says, “With the Amazon acquisition, Whole Foods has become an omni-channel business overnight. The Whole Foods digital experience will be transformed by Amazon’s technology, enabling customers to shop and receive their favorite products in entirely new ways.”
As retail experts at Walker Sands believe, the result will be that “Amazon’s customer base will explode. 84% of consumers have already made a purchase on Amazon in the past year and 55% are already Amazon Prime members.” In addition, and at a stroke, the biggest perceived barrier to online shopping – the high cost of delivery – drops away.
Not only that, but the move targets the emerging power house that is the millennial. Right now, one in five millennials buy groceries online, and this is very likely to increase. Inevitable, you might say.
Overall, as Dan Wilkinson, chief commercial officer of 1WorldSync says, “These new initiatives further validate cross-channel commerce as the future of grocery. Companies have been competing with Amazon and Whole Foods independently until now, but never as a combined solution. This powerhouse suite of online and offline capabilities is totally unmatched in the grocery space, so the stakes have definitely been raised.”
We have to confess that we have not, until now, been particularly focused on the fate of the humble avocado from a technology perspective, but we may change our minds. But it seems that any industry can be and is being disrupted by the technology world.