Amazon, Ever Expanding, Offers Online Order Pickup at Whole Foods

Never content to rest on last week’s disruption, Amazon is now offering online order pickup at select Whole Foods Market stores, including curbside delivery, all for Prime members in an effort to boost membership and gain more territory in the escalating grocery wars.

This move comes as Kroger announced grocery delivery in several markets, while Target and Walmart are never idle in the space. Meanwhile Dutch grocery giant Ahold, parent of banners including Stop & Shop and Giant Food, is consolidating its e-grocery operations under delivery unit Peapod, according to the Wall Street Journal.

The curbside service is first being offered at Whole Foods stores in Sacramento, CA and Virginia Beach, VA with more cities to be added soon. Prime members can pick up produce, bakery, dairy, meat and seafood, floral and everyday items with 30 minutes of ordering and have it brought to their car between 8 a.m. and 10 p.m.

Prime members can access the service on their Prime Now app for orders of at least $35 and get it within the hour, or in as little as 30 minutes for a $4.99 charge. There are designated parking areas for customers picking up online orders, as with many other BOPIS retailers like Home Depot. Prime Now employees bring out the orders when shoppers notify them via app when they’ll arrive.

As if this weren’t enough, Amazon’s Echo device has been brought into the mix, allowing Whole Foods customers to place voice orders, adding items to their cart and then checking out. As added enticement, Prime members get 10% off hundreds of Whole Foods sale items and deep discounts on others, no matter how the order is fulfilled.

The Whole Foods ecommerce juggernaut, launched with Amazon’s $13.5 billion acquisition a year ago, is removing the bad taste from the pullback of AmazonFresh grocery delivery last fall, a rare failure.

Amazon pointed the finger at the U.S. Postal Service’s fulfillment when Fresh exited “select ZIP codes” in New York, New Jersey, Pennsylvania, Delaware, Maryland, California, Virginia, Connecticut and Massachusetts. It’s still available in several major domestic markets including Seattle, New York, Boston, Philadelphia, Washington D.C., Chicago, Atlanta and Dallas, as well as in London, Tokyo and Berlin.

But the economics of a $14.99 monthly membership, on top of Prime’s then $99/year subscription, proved a bridge too far for many customers – especially when they could order same-day grocery delivery from Prime Now. The scale back of Fresh and switching gears to Whole Foods and Prime Now was probably part of the rationale for raising the Prime rate to $119 this year. At the same time Amazon is reportedly merging Fresh and Prime Now, a natural move given recent history.

Jennifer Sherman, SVP of product and strategy for ecommerce platform firm Kibo, said its recent survey found that while price remains the top influencing factor for consumers, 67% of them like the flexibility, convenience and control of store pickup.

“Compared to other moves from Amazon, in this case it’s throwing its hat in the ring of an existing offering from several other grocers including Tom Thumb, Kroger and H-E-B,” Sherman said. “But in true Amazon fashion it’s offering the promise of pickup in 30 minutes or less, and Alexa for placing orders, giving them an additional layer of differentiation.”

Sherman added it will be “interesting to see” if Amazon is able to lure away shoppers from the smaller players with this enticing package of value-added services.

Sylvain Perrier, president and CEO of Mercatus, said Amazon is now more fully leveraging the potential of Whole Foods large retail footprint as it builds a deeper grocery moat.

“Not just at Amazon but among grocery retailers in general there’s a great deal of experimentation to see what sticks with consumers,” Perrier said. “What’s becoming clear is there’s no one path to retaining customer loyalty. To compete today they need to offer a selection of services and fulfillment options that cater to a variety of shopper preferences.”

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