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By now, Amazon’s acquisition of Whole Foods is old news. But we’re interested in what the merger could mean for private labelers and online sellers. Take a closer look with us and we think you’ll agree — the payoff could be huge!
Did you know that the average American family visits the grocery store twice a week? In a world where online retail is quickly gaining market share against traditional brick and mortar stores, supermarkets still offer competitive selling territory. For example, research by the NPD Group found that even among people who buy groceries online, 74% of their food dollars are spent in brick and mortar stores. Put simply, the vast majority of grocery customers still want to see, touch and smell what they buy.
In the grocery realm, Amazon unveiled AmazonFresh earlier this year where customers can order online and pickup as soon as 15 minutes after. So far there are only two locations, both in Seattle, but AmazonFresh Pickup could scale rapidly after last Friday’s deal. Amazon also has a concept Amazon Go store near its headquarters in downtown Seattle where customers don’t have to check out at all; instead, sensors and cameras automatically charge consumers for items they pick up and carry out.
In buying Whole Foods, Amazon suddenly comes into more than 440 physical stores in prime retail locations among upscale buyers, giving the eCommerce giant tremendous options to build out a new market.
“Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy,” Jeff Bezos, the founder of Amazon, said in a statement. “Whole Foods Market has been satisfying, delighting and nourishing customers for nearly four decades — they’re doing an amazing job and we want that to continue.”
So does this all mean for online sellers?
Most notable to us is how Amazon is clearly investing heavily to bridge the gap between its distribution centers and customers. Location matters in the grocery business. Households don’t want to drive 30 minutes to get a gallon of milk and a dozen eggs. If geography matters in grocery, and everything we know about the business suggests it does, then Amazon’s increased exposure in the brick and mortar marketplace could greatly expand the visibility of your products to new buyers. Remember — Amazon’s customers are your customers, and vice versa.
- Perhaps they will create mini Amazon Go stores within or next to Whole Food locations. Or maybe they’ll take advantage of the new shelf space to showcase trending products on Amazon.com. It’s also very likely they will use the new Whole Foods locations to bolster the grocery delivery network for AmazonFresh.
- The new Whole Foods locations would also give Amazon more real estate for lockers used for customer pickups and returns.
- The merger could also ramp up Amazon’s private label grocery business, an industry that is growing steadily in the US and other developed markets. With its Amazon Basics brand, Amazon is already gaining significant market share in diapers and batteries. They could extend the Amazon Basics brand to other categories, and push that out to Whole Foods stores.
One thing is for sure: we’re excited to watch how this purchase will continue to shape and transform Amazon’s influence in the retail world. Amazon’s continued growth will increase it’s exposure to new markets and new customers, and as an online seller, you and your products get to go along for the ride!