Amazon and Whole Foods: 3 Disruptions Coming Fast to Traditional Brick and Mortar Retail
Gary Hawkins, CART
The just announced Amazon acquisition of Whole Foods is sending shockwaves through the online and traditional supermarket industries. While the reverberations from this deal will be playing out in the years to come we can already see three major disruptions that will impact traditional supermarket operators in the near term:
Disruption #1: Omni-channel retailing has just been accelerated. Amazon acquiring Whole Foods represents the first true melding of the online and brick & mortar shopping experience at scale. Amazon will be leveraging Alexa’s shop-by-voice platform, its rapidly growing delivery capabilities, and Prime membership into fuzing together the online and physical store experiences.
The first loser may be Instacart as Amazon reclaims the Whole Foods’ online shopping experience so it is able to extend marketing relevancy and personalization into the Whole Foods online experience. While some speculate that Amazon may just acquire Instacart I believe that Amazon will ultimately cast the service aside. If Amazon were to buy Instacart most other retailers using the service would bolt, viewing Amazon as key competitor. Further, to some degree, Amazon already has delivery capabilities in some number of Whole Foods’ markets.
Disruption #2: Amazon’s marketing relevancy and personalization will transform brick & mortar marketing. Amazon will quickly extend its industry-leading expertise in online marketing relevancy and personalization into the brick & mortar experience. Amazon is a master at helping its customers navigate the millions of products sold through its site; imagine how they can help customers navigate the 40,000 or so SKUs stocked by the typical store. Amazon’s pricing algorithms tied to personalization should be scaring the hell out of brick & mortar supermarket competitors. And don’t think it is not going to happen. This is Amazon’s forté and after spending $13 billion Amazon is going to push it for all its worth.
Disruption #3: Amazon will enter the payment business in a big way. Consider that Amazon has payment information stored for hundreds of millions of customers, especially the estimated 60+ million Prime members it has. Now think about Amazon letting customers pay at Whole Foods with their Amazon account. The company is already doing this at the Amazon Go store it is piloting.
About the Author
As Founder and CEO of CART, Gary Hawkins has an unparalleled view to current and future innovationin fast moving consumer goods retail.
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