The grocery business operates on razor-thin margins.
While this has scared off many entrepreneurs, it attracted a certain tech behemoth that just so happens to love razor-thin margins: Amazon.
After acquiring Whole Foods in 2017 and launching Amazon Fresh in 2020, the company’s path to grocery dominance is taking shape.
… was once nicknamed “Whole Paycheck” for its ~20% premium relative to other grocery stores.
Since Amazon’s acquisition, that premium has dropped to ~10% and in some cases, shoppers have found Whole Foods to be cheaper than competitors.
Besides lowering prices, Amazon has introduced delivery and pickup options to increase convenience at Whole Foods.
… is the firm’s new grocery subsidiary that aims to offer an even more convenient shopping experience. The store’s high-tech innovations include:
Amazon Fresh has 23 stores in operation, including a number in close proximity to Whole Foods.
In areas where both stores operate, Amazon has found little crossover in the customer bases. Specifically, the company has found Amazon Fresh attracts value shoppers that wouldn’t usually shop at Whole Foods.
Being able to open both stores in close proximity without cannibalizing sales has big implications:
And more stores are coming
Amazon announced plans to open 40 new Whole Foods locations last May, and Amazon Fresh has at least 2 dozen locations in the pipeline. With more stores, Amazon’s ability to corner local markets will only increase.
What was that saying Jeff Bezos made famous? Oh yeah: “Your margin is my opportunity.”
Sounds like something a grocer might say.