ADVERTISEMENT
ADVERTISEMENT

Amazon and Whole Foods have failed to upend grocery (AMZN, WF)

Here's what it means: In-store, Whole Foods' performance hasn't taken off under Amazon, and online, Amazon's presence roused competitors to action so they could match it.

Online Grocery Competitors
  • Whole Foods' in-store revenue has largely stayed flat following its acquisition despite changes made by Amazon.Amazon's physical retail segment, which is largely comprised of Whole Foods' in-store sales, has posted quarterly revenue between $4.2 billion and $4.6 billion in Whole Foods' six full quarters with Amazon. The e-tailer's added perks for Prime members, introduced discounts, installed Amazon Lockers, and more, but they haven't propelled in-store sales to new heights.
  • Rather than coming in and dominating online grocery, the threat of Amazon led to competing grocers taking e-commerce seriously and becoming stronger competitors online.Acquiring Whole Foods allowed Amazon to bolster its online grocery offerings, both for delivery and pickup at stores, making it a more formidable player in the space. But in the months and years after the acquisition announcement, top grocery players like Walmart, Kroger, Target, and Aldi have invested in their own online grocery capabilities or partnered with third parties like Instacart to compete with Amazon. This has prevented Amazon from using Whole Foods to build a position in online grocery that's comparably dominant to the one it holds in overall US e-commerce.

The bigger picture: Whole Foods has two characteristics that likely hinder its ability to overtake the grocery industry, which may be why Amazon is opening a new grocery chain.

Whole Foods' relatively small footprint and generally high price point will likely be permanent obstacles to Amazon's online grocery efforts.With less than 500 US Whole Foods stores, it's difficult for Amazon to reach most consumers and offer quick and convenient fulfillment options; competitors like Walmart don't have this issue, considering the Arkansas-based retailer has over 5,000 stores. And with a reputation for high prices, some consumers won't or can't shop with Whole Foods. These issues mean that Whole Foods isn't well positioned to become a leading grocer nationwide like Amazon is the leading e-tailer in the US. Amazon is planning on opening a new grocery chain as soon as this year that will offer lower prices, and if Amazon can open enough locations or expand its grocery fulfillment network enough, it may be able to dominate grocery after all, but it won't be able to purely through Whole Foods.

Interested in getting the full story? Here are two ways to get access:

ADVERTISEMENT

1. Sign up for the E-Commerce Briefing to get it delivered to your inbox 6x a week. >> Get Started

2. Subscribe to a Premium pass to Business Insider Intelligence and gain immediate access to the E-Commerce Briefing, plus more than 250 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now

See Also:

JOIN OUR PULSE COMMUNITY!

Unblock notifications in browser settings.
ADVERTISEMENT

Eyewitness? Submit your stories now via social or:

Email: eyewitness@pulse.ng

Recommended articles

Here's everything to know about being a virgin on your wedding night

Here's everything to know about being a virgin on your wedding night

7 do's and don’ts of the Holy month of Ramadan

7 do's and don’ts of the Holy month of Ramadan

Top 5 sweetest celebrity mother-child relationships that stand out for us

Top 5 sweetest celebrity mother-child relationships that stand out for us

International Women's Day: 5 Nigerian female celebrities championing women’s rights

International Women's Day: 5 Nigerian female celebrities championing women’s rights

Top 5 female directors in Nollywood

Top 5 female directors in Nollywood

6 things that will break a Muslim's fast during Ramadan

6 things that will break a Muslim's fast during Ramadan

5 benefits of fasting during Ramadan

5 benefits of fasting during Ramadan

5 reasons Easter was more fun when we were children

5 reasons Easter was more fun when we were children

Dos and don’ts of supporting Muslims during Ramadan

Dos and don’ts of supporting Muslims during Ramadan

ADVERTISEMENT
ADVERTISEMENT