How Will Amazon’s Acquisition Of Whole Foods Impact the Food Industry?

Amazon has changed how people shop for many categories of products, from books to movies to clothes. It has redefined the buying process across these retail sectors by offering personalised, frictionless and highly user-friendly online shopping experiences.

Now, the online behemoth has turned its eye to the food industry, and the impacts are already apparent: when Amazon announced its intention to purchase US supermarket chain Whole Foods for $13.7 billion, the stocks of major American grocery retailers including Target, Walmart and Costco immediately plunged into the red.

With the purchase of Whole Foods, Amazon gains new distribution points across the US, and additional inventory. It’s the foundation for an incredibly powerful hybrid offering to shoppers: online ordering and in-store pickup of fresh food. It’s a scenario that checks all the modern commerce requirements.

Before the Whole Foods announcement, Amazon had already begun to dabble in food with its AmazonFresh stores, Amazon Restaurants delivery service, and Prime Pantry services.

Other service sectors that may be impacted by the Whole Foods acquisition

While the Amazon-Whole Foods deal represents challenges for grocery retailers, there are other niches that must rise to the challenge or face potential demise. These include:

  • Grocery delivery services which may find it challenging to compete against Amazon on the delivery front.
  • Dine-at-home alternatives to grocery stores, such as Blue Apron, HelloFresh, and other fresh ingredient meal-kit services.
  • The foodservice sector. The restaurant industry has already felt the pinch from the surging popularity of “grocerants” – restaurants and eateries set up inside grocery stores. Interestingly, Whole Foods’ global culinary operations coordinator reports that 15% of the sales in a Whole Foods store usually comes from its eateries.

Defend profits by adopting modern commerce strategies

Amazon’s acquisition of Whole Foods may change how many segments of the food industry move forward. As market disruption escalates, dynamic pricing strategies and other modern commerce concepts will be the only way to level the playing field when selling to or competing against a technologically-savvy organization like Amazon.

Following are some steps businesses can take now to defend against Amazon or any other company that seeks to disrupt the market:

  • Deliver personalised buying experiences online and through sales representatives.
  • Be more transparent with pricing.
  • Leverage big data, machine learning, and dynamic pricing science to send the right offer at the right price.
  • Make purchasing easy and frictionless by creating seamless and convenient user experiences.
  • Create multiple points of contact that allow customers to buy in the manner they prefer.
  • Develop mobile-friendly purchasing sites and apps.
  • Respond in real-time with instant pricing approvals.
  • Respond to constantly changing supply chain dynamics and market movements in real time to ensure customers receive the full, expected value from products.

Whether Amazon’s presence in the food industry grows or not, this is the time to explore modern commerce and dynamic pricing strategies in your B2B efforts. Eventually, some major player or a new startup will develop a user experience that brings frictionless, customer-friendly, personalised buying experiences to the food industry.

To learn more about modern commerce for the food industry, click here to download the eBook, Is Modern Commerce on Your Menu?

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