Commentary

Prime Members Get Magic Mushroom Discounts At Whole Foods

As tries to flip the page on jacking up its annual Prime membership fee from $99 to $119, Amazon is adding another perk to the program starting today in its 28 stores on Florida: Prime participants will get an additional 10% off sale items as well as “deep discounts on select best-selling items.” The benefit will expand to all stores nationwide starting this summer.

“Adding more discounts at Whole Foods could make the Prime program worthwhile for some shoppers and keep them in the fold, as well as draw in some of the roughly 40% of shoppers who aren’t yet members,” according to Morgan Stanley. Analysts at the bank say grocery discounts ‘can go a long way toward justifying Prime membership … even at $120 a year,’” writes Laura Stevens for the Wall Street Journal.

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Remember grandma clipping coupons out of The Great Atlantic & Pacific Tea Company Sunday newspaper insert? Similar but very different.

“To get started, customers download the Whole Foods Market app, sign in with their Amazon account and then scan the app’s Prime Code at checkout. Or, customers can opt in to use their phone number to save at checkout,” the Amazon/Whole Foods news release states.

If that sounds simple to accomplish nowadays, it’s apparently not.

“Amazon had hoped to integrate Prime into all of its Whole Foods stores earlier this year, but the effort has been hindered by technical difficulties, some of which are related to the company’s point of sale systems at checkout, according to an employee not authorized to speak publicly,” Matt Day reports for the Seattle Times. “The company said, however, that the integration of Whole Foods was among the fastest startups of a new Prime program.”

And other integrations, such as kiosks featuring electronic gadgets and lockers for package pickup and drop-off, have gone more smoothly, Day writes.

“Whole Foods, with 463 U.S. stores and roughly 1% share of the fragmented U.S. grocery market, has gained momentum since the Amazon merger last summer, Whole Foods co-founder and chief executive John Mackey told Reuters. Closely watched basket size — the number of items purchased per transaction — has grown since the merger, said Mackey. He declined to offer specifics,” write Reuters’ Lisa Baertlein and Jeffrey Dastin.

“The new loyalty strategy will test whether Amazon's $13.7 billion deal for Whole Foods brings much-feared disruption and an intensified price war to the $800 billion U.S. grocery industry dominated by Walmart Inc and Kroger Co.,” Baertlein and Dastin continue.

A disruption that The Great Atlantic & Pacific Tea Company, for one, isn't around to participate in, alas.

“The price cuts are part of effort to help Whole Foods shake its reputation as an expensive place to shop,” writes Beth Kowitt for Fortune

“We’re going to to become increasingly more price competitive. That’s something that’s been a long-time dream of mine. Our merger with Amazon is helping to make that a reality,” Mackey tells Kowitt.

“The announcement marks the most aggressive stance Amazon has so far taken to integrate the two companies, at least from a consumer perspective, said Bob Hetu, a retail industry analyst with Gartner. ‘There have been gradual steps towards integrating Amazon and Whole Foods. But this is a more meaty idea, tying together this idea of providing fresh foods at a good price to Prime members,’ he said,” writes Elizabeth Weise for USA Today.

“Sucharita Kodali, an analyst at Forrester Research, said the discounts were likely to hurt the profit margins at Whole Foods — but that was besides the point if the move strengthens Prime, a major focus of Amazon these days,” Nick Wingfield writes for the New York Times.

“I don’t know that it will be great from a profitability standpoint, but I don’t know that they really care,” she said. “It’s more customer engagement and customer satisfaction. Maybe it gets them more Prime customers, more Whole Foods usage and more units per cart.”

The deals touted by Amazon in its release include "Organic strawberries: 1 lb. for $2.99, save $2” and “Magic Mushroom Powder: 50% off.” I’m guessing there’s no tie-in for the latter with this week’s publicity blitz for food writer Michael Pollan’s latest book, How to Change Your Mind, but you never know who’s cross-promoting with whom nowadays.

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