Amazon, Food Retail E-Commerce & Last Mile DeliveryHow Amazon & Whole Foods are Changing Grocery & the Food Supply Chain
In case you have not yet heard, Amazon bought Whole Foods earlier this year. Yes, Whole Foods has had a reputation as a “Whole Paycheck” destination. Pairing with technology super giant Amazon is likely to change that. Given Amazon’s history as a market disruptor and the Whole Foods’ affluent customer base, this acquisition seems to be a win-win for both companies simply on its face.
But the acquisition of Whole Foods goes far beyond that.
With Whole Foods, Amazon is gaining valuable assets including 431 supermarkets and 91,000 employees in the United States, Canada and UK as well as a foothold into an industry that thus far, has somewhat eluded them. This acquisition also provides critical information that can help Amazon advance beyond its competitors.
Amazon, Last Mile Delivery
and the Retail Food Industry
You may not realize this, but the food retail industry is broken. Designed to meet the needs of consumers in past decades, yesterday’s supply chain and logistics networks were developed when consumers purchased more processed foods, those with longer shelf lives. Today, consumers are increasingly more interested in fresh and freshly prepared goods. Consumer trends indicate continued interest towards locally sourced food products, especially those that are organic, non-GMO and produced in a sustainable, ethical, environmentally-friendly manner.
Bringing fresh goods to market when they are susceptible to damage and spoilage can be challenging. This is especially true when fresh foods are being transported to consumers for home delivery quickly. To help solve this challenge, Amazon has envisaged the Whole Foods store locations differently, within a regional or neighborhood framework to aid in the distribution process. This can help to reduce the time, cost and challenges of
Additionally, Amazon is poised to utilize a combination of technology and new supply chain and logistics strategies to expedite distribution to retail brick-and-mortar grocery stores and consumers’ homes.
- Economies of scale
- Web presence
- Experience with delivery operations and home delivery
- Knowledge of and use of technology
- Distribution capabilities
- Back office operations
Extension of Last Mile Delivery Options
Consumers are impatient and unconcerned about transportation and logistics challenges associated with fulfilling orders quickly. Amazon and Whole Foods are now at the crossroads of
Coupled with the fact that Whole Foods stores tend to be positioned within affluent areas, Amazon now has a way to optimize its last mile delivery strategy. By leveraging these new assets, Amazon can easily extend its distribution for all kinds of deliveries, including to parcel lockers, enhancing its physical infrastructure measurably. This will make it easier to deliver orders within one or two days as their business grows.
By utilizing the newly acquired Whole Foods’ physical store locations, Amazon can quickly create a network of locations for in-store
What Else is Amazon Likely to Change?
Potential changes are on the horizon as a result of the Amazon acquisition of Whole Foods. This includes:
- More price reductions in products sold at Whole Foods due to reduced costs generated by economies of scale, improved supply chain logistics operations, use of technology and other factors
- Integration of Amazon Prime into the Whole Foods shopping and buying experience
Positioningof Amazon Lockers at Whole Foods locations Positioningof Whole Foods private label brand products on Amazon
- Potential integration of Amazon’s artificial intelligence agent Alexa into grocery shopping and delivery