How Our Weekly Shopping May Change In 2017

The news that Amazon purchased Whole Foods surprised a lot of people for a number of reasons, but the most astounding aspect is likely the fact that now they are officially a brick and mortar presence too. Although the move into grocery stores may seem odd, those with the Amazon app probably already know that you can buy groceries on Amazon.com. In fact, Amazon just announced that those with food stamps can use those at Amazon.com and on their Amazon mobile apps as well. Therefore, Amazon has already taken steps to make their groceries accessible to everyone; it is not surprising that they are now opening up their grocery service via a brick and mortar chain.

Why Whole Foods?

The first question of many people is why Amazon.com would have purchased Whole Foods out of all of the giant food chains. It is actually a very strategic and smart move. A lot of grocery stores are regionally based which means that each local region has a leader. There is no one leader in the grocery world due to this fact, but Whole Foods is a subset of high end grocery stores that is located on both coasts. Therefore, the purchase of Whole Foods allows Amazon to have brick and mortar locations across the region with one purchase.

Additionally, the clientele of Whole Foods is likely overlapped with their existing customer base, making it a smart move that will lead to continued profits. Those who have adopted the online grocery shopping model thus far tend to have more disposable income allowing them to buy in bulk. Since Amazon.com sets minimum limits on grocery orders their average client tends to be upper class. This is the exact audience that Whole Foods already caters too: upper class consumers that want healthier more organic food. Amazon should have no problem making the transition seamless.

Amazon Will Drive Prices Down

One of the most immediate benefits of Amazon.com buying Whole Foods is the fact that grocery store prices are bound to drop. Amazon already sells enough to cut their prices compared to regular supermarkets, but with the addition of retail space to add to their inventory they are likely going to move even more merchandise. This is going to allow them to slash their prices even lower for those shopping instore and those shopping with the Amazon mobile app. In order to stay in business competitors are going to have to have to slash their prices which means that everyone is going to benefit from Amazon purchasing Whole Foods.

Amazon Mobile Shopping Will Drive Out Competitors

Of course, while it is great for consumers it is not going to be great for grocery stores. As mentioned, there is not currently a monopoly in the grocery business because each region of the US has its own leaders. Profit margins are not huge in the grocery business, which means that there is not many comfortable ways for grocery stores to compete with Amazon's incoming lower prices. As a result, smaller chains and more local chains or just neighborhood brands are likely going to get edged by Amazon. Even Macy's and Sears have been unable to hold their own against Amazon.com, so it is unreasonable to expect that grocery stores with local presence will be able too.

Grocery Stores Will Need to Learn to Harvest Data

The grocery stores that will manage to compete against people logging in and shopping with their Amazon app are the ones that learn to harvest data. Amazon.com is able to do well because they cater to browsers needs by collecting data on their searches, preferences, and purchasing habits. They can put together lists and ads of what you need so that you can log in and essentially just make a few clicks and get all you want. This is because they are the king of data. In order for any grocery store to compete they need to learn to harvest the same type of data. This can be done with the data that comes from their store loyalty cards, if they are smart enough to harvest it.

Is the Grasp of Amazon.com Growing Too Fast?

The ultimate question is whether Amazon.com is growing too fast. Many people are concerned that Amazon is going to take over the world of commerce. In the future you may be able to buy your phone, sign into your mobile contract, buy your groceries, your electronics, and maybe even your vehicle all from your Amazon app. This is a large grasp, but if prices stay low it may not be too bad for the consumer. The ultimate question will be if Amazon keeps their overhead low by keeping Amazon mobile prices low, or if once they gain market control they hike them back up.

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