No More Wobbly Wheels

As tech embraces the food industry and the food industry embraces tech, consumers will be the real winners in this battle. Over the last several years as these industries have collided, several startups have been generated to create a shopping experience for a new wave of customers. As large food players have gobbled up tech companies and with Amazon’s recent announcement for its plan to  purchase Whole Foods for $13.7 billion, many companies are now assessing their current competitive position and how they plan to shrink perceived technology or fresh food distribution gaps in their current operations.  

While Amazon has played its hand very close to its chest and even made its deal with Whole Foods contingent upon complete secrecy until it was announced, many have been left to speculate what this deal means to the industry overall. Let’s focus on what this means from a consumer’s perspective.

Does this spell the end of the brick-and-mortar grocery store? Probably not. If you are a person who loves pushing a cart down the fluorescent lit aisles of a grocery store, deftly avoiding fellow shoppers and POS displays, you will be able to always find that experience.  But, if you aren’t one of those people, then all the pieces are finally in place for Amazon to fill your entire fridge, virtually. Now this is something people living along the coasts or in high-profile markets have had access to for a few years, but now it will rapidly expand across the nation.



Let’s just focus on some of the possibilities as they apply to Amazon’s purchase of Whole Foods.

Amazon Fresh can now flourish. It seems like Amazon Fresh has been in perpetual beta test mode, and hasn’t really caught on. That’s because the infrastructure and delivery method for fresh produce and perishables haven’t existed. My wife and I tried to use it for a time, but limited availability for the products we needed meant we still had to go to the grocery store. Whole Foods gives Amazon access to not only these products, but also a footprint of 431 Whole Foods stores across the United States in top demographic areas across the country. In essence, they have purchased an affluent distribution network that is very familiar with Amazon and its network.

“Smart” grocery shopping has arrived. With a $20 add-on to Alexa — Amazon’s smart home system — Dash Wand can help make the home grocery shopping experience even smoother. It’s fully integrated with Alexa and when you press its button, it can scan the foods in your fridge and pantry that you need replaced and activate the Alexa microphone simultaneously. With the Whole Foods deal, you really can get your whole grocery list this easily. 

Let’s talk about pricing. In addition to the perishable food hurdle, the other hurdle that is always included is that of the delivery premium. However, as distribution networks become more efficient, these premiums will also come down. Prices will be driven down across the board, even in other grocery stores.Pricing will also be driven down due to volume and efficiencies built into Amazon

We’ve been turning to Amazon for years for our dry goods. The minute we think of something we might need, we can just purchase with a couple of clicks. But we’ve hesitated on perishable items; it just hasn’t been as seamless and we aren’t confident of quality. Also,  Fresh, although growing steadily, has had fundamental difficulties for shoppers. Whole Foods gives this capability — from a trusted brand — to shoppers and Amazon brings its competences — shipping, cohesive processes, personalization and integration with smart technology — to the table. Our days of sticky carts and wobbly wheels are coming to a close!

1 comment about "No More Wobbly Wheels".
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  1. Jim Thompson from Temple University, July 24, 2017 at 8:51 a.m.

    << Does this spell the end of the brick-and-mortar grocery store? Probably not. >>
    Really?! What % of grocery sales go through Amazon now - maybe 1%. If the company has a "beyond-our-expectations" success with Whole Foods, they might get to 5-10%, combined in-store and online. And lose billions achieving that level. Look, I like Amazon - it's easy and with Prime we get free, fast delivery of light bulbs, shoes, etc. and more valuably, access to movies and music. But I also know that Amazon's investors and its Cloud services are paying for that free, fast delivery. Grocery is a completely different game. In that sector, Amazon will have a much harder time offering a price advantage and has significant disadvantages on product selection and speed, versus brick & mortar.

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