You’ve probably heard that Amazon announced today the acquisition of the Whole Foods Market chain for $13.7 Billion. If you don’t know, Whole Foods is an organic health food supermarket specializing in foods with no additional preservatives, sweeteners or artificial colors. You DO pay a premium for these foods, but they offer a much wider variety of health food options than most markets.
So, what’s Amazon’s strategy here? Some believe it’s the next step towards challenging the world’s largest brick and mortar supermarket chain, Walmart. We all know just how humongous Walmart is, but do you know that you can order items on the Walmart web site for pickup at the store? Yeah, you probably knew that. But, did you know that you can also order a number of items with free 2-day shipping? This service is currently somewhat limited to certain items and products, but I’ll bet Walmart will be expanding that list as quickly as possible.
Since, Amazon introduced Prime Pantry in 2014, charging customers a flat fee of $5.99 to deliver up to a forty-five-pound box of “traditional” grocery items, Walmart must be seeing the oncoming threat to their online ordering business. True, Prime Pantry has its limitations (perishable items are excluded), but one would have to believe that may change in the future. Amazon also has Amazon Fresh, a local grocery delivery service which costs the Prime customer an additional $299 per year. But, for some in the select markets that Amazon Fresh is offered it would seem to be well worth it. Like with other Amazon products, the idea is that one never needs to leave their home to buy goods. Amazon Fresh guarantees delivery either the same or following day. If this service begins to expand to other markets in the near future, it might seriously hamper Walmart’s efforts in the same direction. The end goal of both companies seems to be to eventually allow the consumer to order anything from their home.
What may be more of a threat to Walmart in the future is Amazon Go. Amazon’s first brick and mortar store currently open in beta for local employees. The idea is to have the Amazon Go app on your phone, walk in, pick the items you want and walk out. No checkout, no lines. If you put something back, it is automatically removed from your virtual card. Sounds intriguing. The project has been delayed a couple of times, but Amazon is still testing and seems determined to make it work. If they succeed, I would think that Walmart would be forced to answer with a similar strategy. If they did, Walmart would have the distinct advantage of stores already being in place. I have no idea if Walmart is currently pursuing such a project, but I certainly would be, if I were in their position.
So, are we in for a full-fledged, high-tech supermarket battle of dominance in the future? I wouldn’t be a bit surprised.
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Source: Android Authority
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