- Amazon’s 12 brick-and-mortar book stores may offer some insight into the retailer’s plans for its newly acquired Whole Foods locations, according to The Wall Street Journal. The e-commerce giant launched this retail experiment two years ago, and have used the stores to try different in-store pricing and product selection strategies.
- Possible changes include offering lower prices to Amazon Prime members and curating items to reflect local tastes based on geographical data, reviews and local trends.
- Amazon bookstores don’t use price tags — shoppers can use their phones to scan for product costs, or take advantage of in-store kiosks to check prices. This allows Amazon to use dynamic pricing and learn about shoppers' browsing habits to improve its in-store selection. It seems unlikely that this practice will be passed on to Whole Foods, the business publication said.
A frequent visitor of the Amazon Books chain told the Wall Street Journal the stores create an attractive "feeling of exclusivity," and that consumers line up to get in during the weekends.
Can Amazon bring this level of consumer interest back to Whole Foods? It's certainly possible. The company recently announced it will be centralizing the natural grocer's buying operations to improve efficiencies. While some analysts fear the loss of niche suppliers will undercut Whole Foods' specialty status, a reduced selection may not be all that bad. Amazon Books has a highly curated selection with relatively low volume, offering roughly 5,000 titles. Compared to Barnes and Noble, which carries between 22,000 and 163,000 titles per store, Amazon's selection resembles more of a boutique than a superstore — a strategy that's been well received.
Whether or not a reduced selection will translate into long-term sales remains to be seen, but so far it seems to be a success, albeit in a limited number of locations.
One advantage that Amazon Books has it that prices fluctuate day-to-day, an easier task to accomplish as its paperbacks and hardcovers don’t have price tags. Customers take out their phone to scan an item for the price, or use one of the in-store kiosks; Prime members get a better deal. Unlike in most other retail stores, employees also push shoppers to compare prices online while in the store.
While the likelihood of Whole Foods doing away with price tags is minimal, other Amazon Books-inspired modifications could be in store for the natural grocery chain. Amazon has previously hinted that Prime may become the rewards program for Whole Foods, which makes sense, as there is great consumer crossover between the two companies.
Amazon has a built-in marketing vehicle for Whole Foods that reaches around 70 million U.S consumers. According to Morgan Stanley, 62% of Whole Foods’ 30 million customers are Prime members. Amazon can entice customers to spend more with Whole Foods through special offers, and could potentially rope in millions of other shoppers through the platform.
Also, expect to see a wider selection of items curated just for local shoppers. Amazon has a behemoth-amount of information on customers’ search and purchase habits across the country. The e-commerce giant will likely use this information to cater to Whole Foods customers at its more than 470 markets.
Much will likely stay the same at Whole Foods. Don’t expect Amazon to slash inventory to more closely resemble its bookstores’ format. Also, the core concept of no artificial colors, flavors or preservatives is unlikely to waver.
Ultimately, if Amazon can do to Whole Foods what it did 20 years ago to the publishing industry, it wouldn’t be a surprise to see other grocery chains follow suit. No one wants to become the supermarket version of Border's.