Less than a day after federal regulators in the United States approved Amazon's $13.7 billion takeover bid for Whole Foods, the Silicon Valley retail titan wasted no time in saying it would lower prices at the upscale grocery chain. The company will add Whole Foods' private label products - including 365 Everyday Value, Whole Paws and Whole Catch - to Amazon.com, AmazonFresh and Prime Pantry.
In celebration, Amazon is lowering prices on popular items in Whole Foods stores.
Amazon is well aware of Whole Foods' premium prices, and that's where it's focusing its efforts first.
For a week in late August, shoppers at the upscale Whole Foods Market on the Westport-Norwalk line have gotten a little bonus at checkout, with rotisserie chickens priced on sale a dollar less than the birds at Stew Leonard's just down Westport Avenue. For example, if a Amazon Prime customer goes in to purchase something like organic salmon, they may see ads online later for lemon that would taste really good on that salmon previously bought.
While Whole Foods does boast superior profit margins compared to many of its competitors, allowing Amazon to make some immediate price cuts, the two companies will need to innovate together in order to support ongoing price decreases.
"We're determined to make healthy and organic food affordable for everyone", said Jeff Wilke, CEO of AmazonWorldwide Consumer, in the news release. Customers can have products shipped from Amazon.com to their local Whole Foods Market store for pick up or send returns back to Amazon during a trip to the store.
So not only are we going to see price drops on common items like eggs, butter, meat and fruit, those of us who are Prime members will soon see additional discounts and benefits.
"Grocery has always been the achilles heel for Amazon", Grant said.
Amazon will make Whole Foods more accessible to more consumers. And as a benefit to those who spent $99 on a Amazon Prime account, Whole Foods Market will be incorporated into the program.
The Whole Foods Market brand will likewise be maintained. Shares of other supermarkets fell sharply.
Discounts are not the only reason shoppers use Amazon - selection and convenience are others - but Bezos has never been shy about starting price wars that inflict pain on rivals.
If you're an Amazon Prime member, you will have another way to use your membership and take advantage of lower Whole Foods prices. They purchase from Amazon 25 times a year on average, 11 more visits than non-Prime customers. Walmart has also significantly increased its investment in online shopping through acquisitions to better compete with Amazon on its main turf.