Amazon Online Grocery Sales Surge with Whole Foods Acquisition, says Packaged Facts

ROCKVILLE, Md., Sept. 14, 2017 /PRNewswire/ -- In the first week after its acquisition by Amazon, Whole Foods' branded product web sales reached $500,000, after Amazon placed about 2,000 items from Whole Foods' 365 Everyday Value brand on its site.

On June 16, 2017 Amazon rocked the grocery world by announcing plans to acquire Whole Foods Market in an all-cash transaction valued at $13.7 billion. The acquisition, the largest in Amazon's history, closed in August 2017.

Following the acquisition, Amazon immediately implemented high-profile changes, including:

    --  Lowering prices on certain produce and refrigerated fresh food staples
        by 10% to 43%


    --  Tying in Whole Foods to the Amazon Prime rewards program, including
        Amazon Visa cards and Amazon ACH debit rewards


    --  Adding hundreds of Whole Foods items through a new Whole Foods category
        to Amazon Fresh
    --  Merchandising Echo + Echo Dot in Whole Foods stores, providing physical
        touch-points for all things Amazon

Whole Foods' and Amazon's shares rose 30% and 2%, respectively, following the unexpected acquisition. Rival grocery retailers saw their shares plummet following the move, with Kroger lowering by 15%, Supervalu 14%, Sprout 13%, Target 8%, Costco 7%, Walmart 7%, and Ahold by 5%.

Amazon + Whole Foods as Grocer

Amazon's Whole Foods acquisition marks a tipping point in an industry shift already underway. Packaged Facts' new report on natural channel grocery shopping covers these three key grocery retail trends:

    1. E-commerce: Amazon is easily the largest online grocer, fielding its
       Amazon Prime and Amazon pantry for packaged goods, and Amazon fresh for
       fresh/non-perishables. Amazon's online shoppers seem happy: Amazon Fresh
       is No.1 in satisfaction. While e-commerce grocery currently accounts for
       less than 3% of grocery and consumable sales, Amazon is surging into
       brick-and-click groceries because shopping for fresh foods is an
       essential daily activity.
    2. Home Delivery: Instacart or Not?: The alternative to in-store pickup -
       and Amazon's claim to logistics fame - is home delivery, which an
       increasing number of brick-and-mortar grocers are exploring. To date,
       most brick-and-mortar grocers have opted to work with a third-party home
       delivery service. Enter Instacart: Founded in 2012, the grocery delivery
       service has clients including Whole Foods, Costco, and CVS. According to
       Whole Foods management, Instacart accounts for sale shares in the mid to
       high single digits in participating stores. Amazon's Whole Foods
       acquisition, may, however, change this relationship.
    3. Self-Checkout/Frictionless Shopping: In-store pickup gets shoppers in and
       out of the store quickly, as does self-checkout. Since its Whole Foods
       acquisition, Amazon has repeatedly stated it does not plan to automate
       cashier jobs. But Amazon has demonstrated that it possesses advanced
       checkout technology: Amazon Go, a new and completely "frictionless"
       service that Amazon is testing in its small grocery store in Seattle,
       allows Amazon employees to walk in, shop, and walk out without going
       through checkout. It is possible that Amazon will roll out Amazon Go
       locations or technology nationwide, including in Whole Foods stores.
       Amazon's acquisition will result in increased automation, but it will not
       spell the end of human employment: Amazon will redeploy human capital in
       such a way that enhances higher-touch involvement between staff and
       customer and between customers and Amazon products and services.

Although Amazon's grocery penetration is minor compared to food retail giants such as Walmart and Kroger, the e-commerce giant has seemingly overnight topped the brick-and-mortar natural and organic foods channel in the U.S., covered in Packaged Facts' new report, Whole Foods, Trader Joe's, and Natural Channel Grocery Shopping: The Future of Food Retailing.

For further coverage of Amazon's consumer usage and engagement trends and related consumer usage and engagement strategies, visit Packaged Facts' Amazon Strategies and the Amazon Shopper.

About Packaged Facts

Packaged Facts, a division of MarketResearch.com, publishes market intelligence on a wide range of consumer market topics, including consumer demographics and shopper insights, consumer financial products and services, consumer goods and retailing, consumer packaged goods, and pet products and services. Packaged Facts also offers a full range of custom research services.

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SOURCE Packaged Facts