Amazon’s acquisition of Whole Foods Market isn’t just a means to create a footprint in the physical retail world. It should also boost membership in the Amazon Prime subscription program.
That’s according to Wall Street firm Morgan Stanley, which recently released predictions that millions of Whole Foods customers are likely to sign up for Amazon Prime accounts, CNBC reported. Morgan Stanley analyst Brian Nowak said in a research report that approximately 38 percent of Whole Food customers, which equals about 5 million shoppers, are not yet Amazon Prime subscribers.
“We expect Amazon to convert half of these shoppers between now and the end of 2019,” Nowak wrote, according to CNBC. “We see [Amazon’s] Prime member growth and engagement, Echo device sales and consumer web traffic [and] interest driving solid top line trends and [gross merchandise volume] GMV per customer growth.”
The analyst also believes Whole Foods Market will see sales increase by 12 percent each year through 2022, and that it will reach 3.3 percent market share in the U.S. during that time frame. That prediction is up from 2.1 percent at the end of 2017.
“[Overall] growth will come from new shopper growth, which we [already] see inflecting from more competitive pricing and increased convenience,” Nowak said, according to the CNBC report.
When Amazon closed on the acquisition of Whole Foods Market this summer, it immediately cut prices on approximately 2,000 items from the Whole Foods 365 Everyday Value brand. The move resulted in the products selling out online, according to Spencer Millerberg, chief executive officer of One Click Retail, which monitored sales.
All in, Amazon-owned Whole Foods saw branded product sales at $500,000 in the first week, according to One Click Retail’s estimate. Apart from the big spike in online retail sales, foot traffic has also gone up 25 percent since the Whole Foods acquisition was finalized.