Amazon’s big Whole Foods Market buy is paying off, particularly when it comes to online ordering.
Amazon, in celebration of its acquisition of Whole Foods Market has done what Amazon is known best for doing: cutting prices. Specifically, Amazon has cut prices on 2,000 or so items from the Whole Foods 365 Everyday Value brand. They’ve cut prices and sold out of the most-popular items, said Spencer Millerberg, chief executive officer of One Click Retail, which monitored sales.
All in, Amazon-owned Whole Foods saw branded product sales coming out to $500,000 in the first week, according to One Click Retail’s estimate.
“It’s easy to implement and bring everything online with Amazon’s endless shelf,” Spencer Millerberg said, regarding the news.
Speed is easy, he noted; the hard part will be whether or not Amazon can sustain inventory and find ways to leverage physical stores against the cost associated with grocery delivery.
Apart from the big spike in online retail sales, foot traffic has also gone up 25 percent since the Whole Foods acquisition was finalized.
“This is very early evidence that this marriage made in heaven between Amazon and Whole Foods is working,” said Kirthi Kalyanam, director of the Retail Management Institute at Santa Clara University. “Amazon has struggled with online grocery because shoppers didn’t always know what they were buying. Now Amazon has the seal of approval that Whole Foods’ [365 Everyday Value] brand provides. Consumers feel that they don’t need to touch and smell the produce because Whole Foods has already made sure it’s top quality.”
Online grocery purchases have been something of a tough sale for consumers. Only 4.5 percent of shoppers frequently bought groceries online in 2016, said Kurt Jetta, CEO of TABS Analytics, a consumer products research firm.
“Behaviors are shifting,” he said, “but retailers have a long, long, long way to go before they can get to the necessary critical mass to be profitable selling groceries online.”