3 changes to expect from Amazon's purchase of Whole Foods
Dan Wilkinson is the chief commercial officer of 1WorldSync, with more than 20 years of strategic business development and general management experience. Dan plays a key part in developing 1WorldSync's strategic direction and is responsible for ensuring that 1WorldSync's clients derive maximum value from its services and solutions.
It’s been just weeks since Amazon shocked the world with its purchase of Whole Foods. The reported $13.7 billion acquisition has everyone talking. Some see the move as positive, others negative and a few have managed to see the humorous side of one of 2017’s biggest deals. No matter the stance, most people share one question: what’s next?
That really is the billion-dollar question. While Amazon has never been shy about its new pursuits, the acquisition of Whole Foods has left the commerce world — particularly in the grocery industry — unsure of what’s to come. The deal indicates Amazon’s growing level of confidence in the food industry and the vast potential possible with the unification of e-commerce and the brick and mortar store.
Jeff Bezos most likely has a few tricks left up his sleeve, but here are three changes we can soon expect from Amazon’s purchase of Whole Foods.
1) Increased transparency and trust
Critical to Amazon’s foray into grocery will be meeting consumer demands for product information and greater transparency into the entire supply chain. In lieu of being able to touch and feel products — particularly important for fresh products and similar grocery items — consumers need access to detailed product information, such as ingredients, sourcing and more. Not only must this data be complete, but it also has to be trustworthy.
Fortunately, trust and transparency are two of Whole Foods’ biggest value propositions. While Amazon has built its empire on the volume of products it retails, Whole Foods has earned an incredible level of consumer trust through transparent product information. Combined, Amazon offers the e-commerce expertise to exceed shoppers’ expectations for effortless and fast fulfillment, and Whole Foods raises the bar on demands for stronger, more complete product information.
To provide this information across all channels and devices, it’s critical that Amazon and Whole Foods engineer a single source of product information. Consistent experiences are the standard of 21st-century commerce, and consumers can easily turn away from companies that look or feel different in-store and online. While grocers unable to deliver on today’s top ecommerce experiences will lose business, Amazon’s acquisition of Whole Foods enhances the capabilities and customer loyalty of both brands.
2) Improved in-store shopping experiences
Amazon is already testing a number of improvements to its commerce experience with ventures like Amazon Go. We’ll likely see these enhancements grow under the Whole Foods acquisition.
While this concept is still unproven and a long way from becoming mainstream, Amazon Go stores could dramatically streamline how shoppers find and purchase products. The stores use a blend of technology to eliminate the checkout process and simply charge customers when they leave the store, which could be a game-changer in the world of retail. Even though these stores aren’t much more than a proof of concept, they do give us insight into Amazon’s plan for physical stores.
The Go stores showcase Amazon’s commitment to using technology to vastly improve the customer experience in an actual location. While many of Amazon’s key advantages aren’t as visible (customer analytics, distribution and logistics channels), all of this combined technology will improve the overall shopping experience, both in-store and online.
3) Fresher food, faster
Perhaps the biggest change to grocery will come as Amazon ventures further beyond the cloud. Amazon Books and AmazonFresh Pickup are the commerce giant's most recent attempts toward an increased brick-and-mortar presence, but never before has the company had access to a distribution network like Whole Foods’ 456 stores in 43 states.
One of the biggest limiting factors in grocers moving online has been the difficulty of quickly delivering fresh food to customers’ doorsteps, elevating location as a key driver for commerce success. Using Whole Foods storefronts as fulfillment and distribution centers, Amazon can sell fresh, localized products directly to its own customers (much like AmazonFresh Pickup, but on a larger scale). As many Whole Foods stores are located in urban high-density areas, Amazon will be able to reach a new pool of consumers.
When combined with Amazon’s own powerhouse logistics operations, it’s only a matter of time before this acquisition leads to major improvements in the omnichannel shopping experience. Delivery times for local groceries could decrease to just an hour, and these orders will combine the commerce efficiencies of Amazon with the quality of Whole Foods.
On the long list of areas where Amazon excels, staying on the cusp of commerce trends is near the top. The acquisition of Whole Foods and the improvements it’s inspiring indicate the future of grocery and force other grocery players to raise their own standards. Amazon hasn’t been in the grocery game for long, but it should come as no surprise that the company is already setting the bar high for competitors.
Fortunately for grocery players, not only is this bar one worth chasing, but leading technologies make this process easier. Via a single source of data that disseminates consistent, trusted information across all interactions, any grocer can make substantial improvements to their customer experience by integrating online and in-store approaches. However, grocers must do this quickly. Amazon has proven its ability to move fast once it commits to a specific market, and there is no doubt that it is now fully committed to the grocery industry.