8 Ways Amazon’s Digital CPG Supply Chain Leverages Whole Foods

Nearly two years ago Amazon’s purchase of Whole Foods, in a $13.7 billion dollar deal, made both food industry professionals and consumers stand up and take note:

Shoppers of the organic grocer’s produce, seafood, meat, and pretty-much-everything-else, now saw the potential for their goods to be more affordable.

And food and consumer goods manufacturers anticipated more pressure on their trade dollars at Whole Foods stores. As suppliers and distributors attempted to map to the coming dynamic, they turned to technology providers like AFSfor answers.

Until recently, the merger’s post-buyout retail execution changes have been slower-than-expected, but now it’s kicking into high gear, and like faithful soldiers, Amazon’s tactics roll-out one-by-one. Here are top eight ways Amazon connected its digital supply chain to Whole Foods, so you can consider what this means to you.

1. Amazon Echo displays

Almost immediately, Amazon Echo displays and kiosks popped up like magic.

“Clearly this was a step-one initiative in their digital supply chain strategy, virtual ordering for consumers,” Gennadiy Vaksman, AFS Supply Chain Project Manager advises, “The Echo and Echo Dot are the new click and mortar gateway to customer loyalty and a natural choice for Amazon Prime Members to order their groceries this way also.”

Vaksman works with food distributors to realize this reality on the back end.

“As AFS introduced the new OMSi for food distributors to assist their clients in placing orders via the Amazon Echo, we could see how this trend would play all the way across the digital supply chain,” Vaksman reports.

2. Amazon Lockers

To leverage its new brick-and-mortar presence, thanks to Whole Foods’ 470 stores in the U.S. and Canada, Amazon added its signature yellow package pick-up lockers to the bulk of its newly acquired stores, giving its online base yet another reason to show up in the flesh.

For Whole Foods, the move boosted “micro” visit sales by four percent more than Whole Foods locations without lockers, according to an inMarket report provided exclusively to Reuters News.

For consumers, it provided security at home and made it impossible for porch pirates to grab their Amazon purchases.

3. In-person Amazon support

Previously Amazon.com customers had limited support options that were mostly automated, but the buy-out allowed the retail powerhouse to address this key customer pain. In a world where artificial intelligence and automation rule, Amazon’s addition of face-to-face returns speaks to the continued importance of customer service.

4. Discounts discontinued at Whole Foods

Amazon discontinued Whole Foods’ existing discount programs which included a coupons and rewards program.

“One of the main value propositions for the acquisition was to link the online and the in-store shopper,” Vaksman adds. “This savings alignment will drive both a brand’s ability to increase sales.”

5. Sale on sale for Prime Members

In one of the most expected moves, Whole Foods recently began to offer discounts to Amazon Prime members, mainly in the form of an additional ten percent discount on hundreds of already on-sale items.

These items are featured throughout the store with blue and yellow “10% Off” and “Prime Member Deal” aisle signs. Shoppers with Amazon Prime memberships punch in their phone number associated with their membership at checkout or log into the Whole Foods app with their Amazon Prime credentials to access this perk.

6. Weekly specials

In addition, Prime Members now have access to weekly deep-discounted specials, some of which appear to add value to Whole Foods as a move into hot markets. For example, Whole Foods recently offered a buy-one-get-one deal on 12-packs of its 365 Everyday Value Sparkling Water, which perhaps is an attempt to tap into the on-trend millennial brand, Le Croix, which sells for $5.99 per case at most Whole Foods stores.

Inside 365 by Whole Foods Market. Photo credit: Whole Foods Market

7. Everyday discounted items

Among one of the first in-store changes was an addition of permanently discounted prices on day-to-day items like eggs through the Whole Foods house brand, 365 Everyday Value.

“This will not only bring more customers in for the kind of items they need to replenish often but will also set the stage to expand market trust and loyalty for this important brand,” Vaksman notes.

The brand paves the way for the next-generation through the company’s sister 365 by Whole Foods Market locations that tailor to millennials.

8. Free two-hour delivery

Arguably the most anticipated benefit and the most important lesson to come from it all is delivery, delivery, delivery.

“This move officially means that all grocers must now face an acceleration of the digital supply chain,” Vaksman says.

This month Walmart amped up its online program with a free online ordering, same-day drive-up, pick-up feature, supported by a mass-marketing campaign. The company is also reported to be working with Google and its voice-activated competitor, Google Home.

Whole Foods offers Amazon Prime members free two-hour delivery of orders of $35 or more. At the moment this is available in ten U.S. cities with more expected to release this year.

The next move

What comes next is important, as companies attempt to capture an online grocery environment that is quickly being adopted by both consumers and the industry’s digital supply chain market.

According to a recent Nielsen study, a whopping 70 percent of consumers will shop for groceries online by 2025, a prediction that will represent $850 per household or $100 billion total annually.

“Manufacturers and Distributors who deal with these newly tooled retailers must adapt to the speed of the new economy or face out-of-stocks, late fees, shelf reduction and finally dispositioned by brands that can keep pace,” Vaksman concludes. “E-commerce isn’t the next major retail sector disruptor, it is now.”