Soon Amazon Prime members will receive additional benefits when they shop at Whole Foods Market, such as an additional 10% off already discounted products, CNBC reports, citing anonymous sources. That could put intense pressure on other grocers to offer similar deals.
With margins as tight as they are in the grocery business, many chains — especially those not named Walmart — would find it tough to compete with the long reach of Amazon and Whole Foods.
The move by Amazon would try to leverage the large number of Prime members who don't regularly shop at Whole Foods. About three-quarters of Whole Foods shoppers are Amazon Prime members, but fewer than 20% of Amazon Prime members are Whole Foods shoppers, CNBC reports.
That pool of non-Whole Food shoppers promises to be a source of growth for the Amazon-owned grocer, probably at the expense of other brands. For vendors, the untapped Amazon Prime members represent an opportunity to reach a new customer base. That is especially the case for natural and organic brands, which have only broken through to a small set of U.S. households.
The new benefits come on top of others recently started by Amazon at the grocery chain it snapped up last year. For instance, Whole Foods has rolled out no-extra-charge delivery of products to Prime members in certain locations, 5% cash back when members use its Visa rewards card at Whole Foods stores and other member deals.
Whole Foods has ended the loyalty program it started about a year ago, when it was still an independent actor. That program wasn't considered a particularly strong one in the industry, the Wall Street Journal reports. Now that Whole Foods is part of Amazon, its new benefit offerings will essentially be part of the larger constellation of Amazon Prime benefits.
Recently Amazon said that it would raise the price of Prime membership to $119/year from $99/year. But it also added various benefits to go with no-extra-charge two-day shipping and streaming entertainment, such as Thursday night football games through Prime and unlimited photo storage.
Whole Foods' major competitor, Walmart, offers low prices but doesn't have a membership program like Amazon Prime. Lately, though, the bricks-and-mortar retail giant has been investing in automation and said it plans to expand its grocery delivery business to 800 stores by the end of 2018.
