Jeff Bezos said, upon receiving NRF’s Top Retailer award in 2013, “In order to break a new market, Amazon focuses on the weakest part of its economic model.” Four years later, Whole Foods, known as “Whole Paycheck” by customers who deemed the store “good but overpriced”, formalised its partnership with Amazon on Monday 28 August, and at the same time, radically reduced its prices.
This partnership has simultaneously sparked a wave of panic on the stock markets and a round of applause from American households that are always keen to pay less. Jeff had stuck to his strategy: the pricing was the weakness!
”It’s just the beginning” boasts the first Amazon Whole Foods in-store marketing.
Let’s begin with a short video:
— 365byWholeFoods (@365byWholeFoods) 28 août 2017
1st point: it’s strange to see a label with the juxtaposed Whole Foods and Amazon logos. It’s official: the Seattle giant really does have its foot in the physical retail door, a step that has seemed impossible for many historic retailers and disciples of Bernardo Trujillo.
This $13.7 billion cash relationship (annual turnover of $13 billion) is testimony that things will never be the same again. And, if further proof were needed, stock prices over the past week offer a glimpse into the tsunami currently being created by this partnership with regard to retail strategies. But how high the wave will ultimately be remains to be seen.
What is clear is that all communication relating to this “marriage” was carefully prepared: ‘‘We’re growing something good … this is just the beginning!!!” Prices and point-of-sale advertising have been planned down to the finest detail. The question is, what will existing customers think, given the current price image? Will the lower prices put off regular customers? Time will tell.
2nd point: the new owner promoting its flagship technology product, the Amazon Echo, at reduced prices and labelling it “Farm Fresh”; showing Walmart, who only five days previously announced its partnership with Google, that when it comes to “voice shopping’’, Amazon Whole Foods will not be beaten: $99.99 compared to $179 on the Amazon.com website.
— toddbishop (@toddbishop) 28 août 2017
3rd point: It started with cutting prices on a “selection” of twelve basic products, rather than on a full shopping basket for a family. But this was enough to create a buzz from which to promote the 365 product range.
And of course, this is “just the beginning”. Jeff Bezos wants to use Amazon to ensure that everyone has access to “healthy products”, as opposed to just the “boho hipster” elite, the former Whole Foods target market. The product selection is not without symbolism: bananas, avocados, apples. The price cuts, on the other hand, are anything but symbolic: an average reduction of 43%.
Nevertheless, Jeff Bezos will have to learn what is involved in integrating a physical business with an operating account; not having to do so was an advantage for the Internet pure players.
But so far, the Americans are impressed: ‘’We love it!’’
American households have already embraced the change and are flocking to Twitter to share their praise:
FINALLY GONNA BE ABLE TO AFFORD REGULAR GROCERY SHOPPING AT WHOLE FOODS THANKS @AMAZON
— SUGA & SPICED COGNAC (@TAITEON) 28 août 2017
Peep the discounts! And it’s only day 1. pic.twitter.com/urAuCluZEf
— Lauren Thomas (@laurenthomasx3) 28 août 2017
And everyone, from Business Insider to Geekwire, is comparing the “pre-big bang” prices with those of “the day after”.
Amazon’s transformation of Whole Foods puts the entire grocery industry on notice pic.twitter.com/cTjVY8iZIn
— Business Insider (@businessinsider) 4 septembre 2017
Sure, there is some adjustment due to the fact that Whole Foods prices were considered way above the US price index, even on organic produce. Yet once again, Amazon has applied a stroke of genius to its communication: all this fuss over (for the moment) a dozen products (no-one is in a position to say how many products will ultimately be affected) and some Amazon Echos at the end of the aisles…