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Amazon's First Move

By Joe Pawlak, Managing Principal, on August 31, 2017

It took little time before Amazon made its first move in the supermarket industry following the Whole Foods acquisition by announcing drastic price reductions in several product categories. Overall reviews are mixed, with some experts saying there have been big price drops in key staples and others believing the overall impact is modest at best. It is evident that Amazon is making a strong statement that it intends to be a much bigger player in the supermarket space by growing its share of market basket with existing and even new customers. The new price cuts are just the first step in Amazon’s goal of helping Whole Foods shed its “Whole Paycheck” reputation.

What has yet to emerge is the foodservice opportunity from the Amazon-Whole Foods grouping. We expect Whole Foods’ prepared foods to eventually become a food delivery option on Amazon’s website. Whole Foods gives Amazon access to over 460 kitchens throughout the U.S. to execute excellent quality prepared foods, delivered to your door hot and ready to eat.

What could play out in many homes across the country is this scenario: A woman is shopping on Amazon for the latest electronics around 6 p.m. in the evening. During this time, a screen pop-up asks her, “Have you had dinner yet?” She is hungry and clicks on the link to see a menu of chef-quality foods, all offered and prepared by Whole Foods. She orders the most appealing meal, as well as a few staple items on the Whole Foods microsite such as bananas, organic oatmeal and kefir. Within 45 minutes, Amazon delivers the meal and groceries right to her door. And since she’s an Amazon Prime member, delivery is free. Pretty powerful stuff.

 

 

Joe Pawlak, Managing Principal

Joe is head of the Advisory Practice, Technomic’s vertical that is engaged in food industry proprietary and multi-client consulting and research assignments. A 30-year food industry veteran, Joe’s experience encompasses virtually all food industry categories and channels. Read more »

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