by Daniel Granderson
August 22, 2017
There is a bit of irony in Amazon Fresh: many products in the program are not actually fresh. This is because some 54% of its 33,000 odd product choices are part of its Household, Health & Beauty category—a testament to the company’s cross-selling strategy. Nevertheless, it lags—albeit only slightly—the average number of items carried in the average supermarket. Customers expecting the degree of assortment they find through other Amazon retail categories may be disappointed.
However, its acquisition of Whole Foods should push product choices higher in relatively short order. And that is just the beginning. Among the many changes Packaged Facts expects to result from the acquisition (more competitive pricing, rewards tied to Amazon Prime membership, multi-channel data analytics, and an explosion in multi-channel ordering, delivery and pickup options among them), Whole Foods can also help educate and inform Amazon regarding private label brands and organic and natural products, two areas that Whole Foods has been instrumental in developing. This input will bring more Amazon private label food and beverage brands to market, and it will likely take organic and natural sales and market exposure to the next level. Both moves have pricing and margin repercussions for competitors.
And arguably, Whole Foods cares about its customers and about its place in the world, a standing among consumers that Amazon may not enjoy. Whole Foods has bent over backward to craft a brand image founded on community involvement and environmentally-friendly initiatives, and it has been a trendsetter in educating customers on health, food and diet. This is just the type of company ethos that can help give Amazon a more human face—something Amazon will seek to leverage.
So, while the purchase will result in increased automation (with robots doing more of the grunt work, just as they do in Amazon’s fulfillment centers), it will not spell the end of human employment. Rather, Amazon will seek to redeploy human capital in such a way that enhances higher-touch involvement between staff and customer and between customers and Amazon products and services (a stop into Amazon Books reveals Amazon’s approach: its staff do not explicitly “sells” products; their role is more educational). Food concierges, personal shoppers, brand docents, chef educators, and other higher-touch personnel could fill posts that help create a highly dimensional, high-touch environment that helps bring the customer into the store.
This could help transform the Amazon brand into something much more dimensional, adding a layer to its Amazon Prime loyalty proposition that, while wildly successful, has lacked actual face time with customers that remains important in building customer relationships.
-- by David Morris, market research analyst, based on his series of brand new Packaged Facts reports on the Amazon landscape, the Amazon grocery category, Amazon pet products and services, and Amazon consumer financial services and payments consumer usage trends
Packaged Facts' new report, Whole Foods, Trader Joe's, and Natural Channel Grocery Shopping: The Future of Food Retailing, covers Amazon's penetration into grocery retail, as well as other trends shaping the grocery market.
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