What Amazon’s Purchase of Whole Foods Means for Your Wallet

When Amazon launched in 1995, its whole business was about selling books. Fast forward a couple decades and they had transformed into an online superstore that’s forever changed the way we shop. And where did they go from there? Well, they went to Whole Foods.

On August 28, 2017, Amazon officially took over the helm at Whole Foods, purchasing the upscale grocer and making big changes along the way. And while mergers and buyouts happen all of the time in the world of business, this particular marriage comes with some unique perks for the customer. Let’s check how Amazon’s latest purchase will benefit you, and more importantly, your wallet.

The Era of Whole Paycheck

If you don’t already shop at Whole Foods, here’s the skinny. It’s an American supermarket chain that’s known for exclusively featuring foods that are free of artificial additives – such as preservatives, colors, sweeteners, flavors and hydrogenated fats.

Whole Foods also seeks to promote organically grown foods, and they provide a variety of nutritional products. One more thing – they’re historically considered a pricier option, which has earned them the name “Whole Paycheck” in jest.

Next to behemoths like Wal-Mart and Kroger, Whole Foods is still a small, responsibly farmed tilapia in a big pond, holding only about 1.2% of the overall U.S food and grocery market. That said, since Amazon’s announcement and eventual purchase of Whole Foods, food retailers, including Sprout, Suprvalu, Target, Kroger and even Wal-Mart – watched their stock shares drop. Post the closing of the deal, these six stocks erased “nearly $12 billion from their combined market capitalization,” according to CNBC news.

In other words, this is kind of a big deal.

Can I Get a Price Check On Avocados?

So what does this change mean for your wallet? On the day that Amazon took ownership of Whole Foods, the grocer’s prices dropped as much as 43% on specific staples. This includes favorites such as organic avocados, organic cage-free brown eggs, almond butter and organic baby kale.

There were also additions at the stores, such as the Amazon Echo, which was also on sale for $99.99. While this may seem like a shift from coconut oil and quinoa, it did a good job of displaying Amazon’s new – and significant – presence in Whole Foods.

The purpose of these discounts is to better compete with the larger grocery stores and attract a more budget-conscious consumer. “Price was the largest barrier to Whole Foods’ customers,” said Mark Baum, a senior vice president at the Food Marketing Institute. “Amazon has demonstrated that it is willing to invest to dominate the categories that it decides to compete in.”

Check out the full list of price cuts below:

Image: CNBC.com

Competitors Could Slash Prices

The beauty of a significant shift in any market is that all of the other players start scrambling to keep their slice of the pie. Wal-Mart has been making more of an effort to compete with up-and-coming grocers, such as the budget-friendly grocer Aldi. In 2016, Wal-Mart made a multimillion-dollar investment to lower their prices even further than they already are. It’s well aware of the evolution of Whole Foods, and it’s going to do everything in its power to stay on top. Even if you don’t shop at Whole Foods, this could translate to better prices and more convenience for you, the consumer.

New Amazon Perks!

Of every $10 spent online, $4 are being spent on Amazon. And if you pay for Amazon Prime, you’re not alone. Approximately 64% of all households in the U.S. have Prime memberships, which comes out to about 80 million people. So yeah, that’s a lot of free two-day shipping.

The Amazon-Whole Foods fusion is going to improve your Prime memberships, too. You’ll soon have access to a Whole Foods rewards program, which will provide additional savings.

They are also connecting the brick and mortar business of Whole Foods with AmazonFresh, their grocery delivery service. AmazonFresh, first unveiled in 2007, has had a rough go so far. Even after a decade of trial and error, they haven’t had much luck in the grocery store space. With Whole Foods in their utility belt, though, they now have access to an industry that they’ve wanted to reach for years.

With these new perks, you may never have to leave your home for groceries again.

Cons of Amazon Purchasing Whole Foods

While we spend a lot of time focusing on the benefits of Amazon owning Whole Foods (for good reason), there are some concerns about the new relationship, as well. Namely, critics are worried about the way in which Whole Foods will lower their prices.

Amazon’s ability to automate and optimize has been at the root of their success. There are some who believe that Amazon will cut their prices by downsizing their staff. If you haven’t been into a Whole Foods lately, they’re commonly known for their great customer service. And with such good employee benefits, it’s no wonder that they’ve attracted such a fine staff.

With the tides changing at Whole Foods, they’ll likely look for ways to stay competitive with the bigger brands. And this may mean fewer cashier positions.

More on the Way

As the new and improved Whole Foods continues to evolve, you can expect some big changes to come in the future. Make sure you’re aware of these perks and benefits so you can get the best value for your groceries.

The post What Amazon’s Purchase of Whole Foods Means for Your Wallet appeared first on ZING Blog by Quicken Loans.

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