Speculation continues to percolate on the implications of Amazon’s recently completed $13.7-billion purchase of Whole Foods. Did Amazon buy the pioneering organic food and grocery chain to gain instant access to its brick-and-mortar stores in attractive neighborhoods? Do Jeff Bezos and his team want to exploit the vast cross-selling opportunities because of the presumed similarities between Amazon Prime members and Whole Foods customers? Is this an end-run around Walmart, who until this deal looked set to dominate online grocery ordering? Is Amazon trying to capitalize on the growing trend of mail-order meal kits?
Whole Foods Is Becoming Amazon’s Brick-and-Mortar Pricing Lab
And changing how Americans think about the cost of healthy food.
September 12, 2017
Summary.
When Amazon bought Whole Foods, the online retail giant essentially bought a bricks-and-mortar retail laboratory. More precisely, it bought a network of 456 customer-friendly testing facilities which welcome roughly eight million “volunteers” each week. Amazon’s relentless price testing in the online world anchors its competitive advantage. Its unrivaled base of knowledge allows it to use price as a communications tool, a recruiting tool, a psychological weapon, and a value driver in ways that transcend the basic mechanics of supply and demand and profit and loss. Now Amazon can supplement that knowledge with direct, proprietary insights about the offline retail world. And it will use what it learns to do two things: first, change the price perception of organic foods, and second, to grow the healthy-foods category overall.