Expectations high after Amazon buys Whole Foods
The marriage of Amazon and Whole Foods is a big break for the organics category, marketers and analysts say.
“I would argue that the merger’s value will be based on Amazon’s ability to run a more efficient organic produce supply and supply chain strategy than the competition,” said Michael Castagnetto, vice president of global sourcing with Eden Prairie, Minn.-based Robinson Fresh.
Whether the merger will lower prices on organic produce remains to be seen, Castagnetto said.
“It’s pretty clear that a retail price point perception is anyone’s game,” he said. “The ability to impact public opinion on pricing is one thing, but the net result — the ability to efficiently put organic produce through Amazon’s supply chain and into consumers’ homes … will be the determining factor as far as the retail dynamic,” he said.
The merger likely will increase consumer access to organics, Castagnetto said.
The merger already seems to be helping to increase “pricing pressure,” said Kevin Stennes, organic sales manager at Chelan, Wash.-based fruit grower-shipper Chelan Fresh.
“Pricing has gotten really aggressive, and it’s going to cause other retailers to get more aggressive, too,” he said.
Consumers of non-perishable organic items seem certain to benefit from the merger, said Chris Ford, organic category director with the Vancouver, British Columbia-based The Oppenheimer Group.
How it affects perishables remains to be seen, he said.
“I think there’s a majority of people who will continue to want to go to pick, squeeze and smell their own perishables, but that mechanism is in place,” he said.
Whole Foods and Amazon can learn from each other, and customers of both will benefit, said Dick Spezzano, a Monrovia, Calif.-based retail consultant.
“Amazon doesn’t have much of a reputation on the grocery side,” Spezzano said.
Amazon prime
What it does have, he pointed out, is Prime, a network of subscribers who pay for access to products available through Amazon.com.
“They’ll figure out a way to transfer those Prime customers into Whole Foods,” Spezzano said.
Stephen Paul, category director for stone fruit, fall fruit and grapes at Porterville, Calif.-based Homegrown Organic Farms, has e-commerce in his own professional background, having developed the Gourmet Shopping Network portal designed to connect growers, manufactures and specialty food suppliers directly to the consumer and also launched California Gourmet Co., an e-commerce and brick-and-mortar retailer of fresh fruit and gourmet food items. He also is co-owner of tech firm Open Kettle LLC.
Paul called the Amazon-Whole Foods deal “flat-out exciting.”
“What it does is bring you closer to the home and direct sales. It brings you a paradigm shift into the way marketing and data and information is distributed to the customer, which is on a digital platform,” he said. “You have a company with a platform like Amazon that has basically perfected the shopping experience.”
How produce fits in remains a mystery, though, Paul said.
