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Home Delivery an Essential Contributor to Growth or a Passing Fad?

02/18/2018

Spurred by the acquisition of Whole Foods Market by Amazon and the power of Amazon Prime has generating buzz among analysts and commentators.  Prime Now has introduced home delivery within two hours from Whole Foods Market locations in four urban centers with the intention of expanding the program to most of the Whole Foods Market chain during 2018.  John Mackey co-founder and CEO of Whole Foods Market stated, “We are happy to bring our customers the convenience of two-hour delivery through Prime Now accessing thousands of natural and organic groceries and locally-sourced favorites.”  He may not be aware but Amazon has restructured purchasing and Whole Foods Market is functioning with more centralized purchasing and order-to-shelf stocking disfavoring “local” in favor of margin.  However, it was never intended that John would really stay in the loop or have much say in the company since Amazon purchased Whole Foods Market and not the other way round.

 

Home delivery is being introduced by competing chains. If they are successful in their specific regions this will seriously undermine the initial advantage offered by Amazon Prime Now.  Clearly the demographic loyal to Whole Foods Market will continue to source their requirements especially in high density urban areas from Whole Foods Market. During the past five years, clones such as Sprouts have eroded the Whole Foods Market primacy in the organic and natural space.  In addition major supermarket chains have introduced their own organic and natural brands and have begun selling the concept of “local”. This is evidenced by Kroger soliciting supplies from small-scale and local producers terminated by Whole Foods Market.

 

Click and collect may well be a less expensive alternative to home delivery especially in suburban areas which are well served by the major chains including Safeway, Kroger and the upscale private chains including Wegmans and H-E-B, all of which have strong local support.