Amazon.com Inc. (AMZN) plans to attract new Whole Foods shoppers by building extra stores in the U.S. and giving more grocery customers the opportunity to qualify for its quick delivery service, according to The Wall Street Journal.
People familiar with the matter told the newspaper that the online retailer aims to build more of the supermarket chains in regions of the country where it has added customers since the merger. Those plans, the sources added, will also ensure that more of the natural grocer’s shoppers have access to the company’s popular two-hour Prime Now delivery service.
One person told the Journal that Whole Foods employees have been exploring potential retail spaces in and around Idaho, southern Utah, and Wyoming, areas where the grocer currently doesn’t have stores. The source noted that some of those retail spaces were slightly larger than average Whole Foods stores, at about 45,000 square feet, indicating that Amazon is keen to build bigger supermarkets to accommodate its delivery and 30-minute pickup service for online orders.
The company’s two-hour delivery option for subscribers, Prime Now, currently serves more than 60 cities, while its online grocery pickup service is available to customers in nearly 30 cities. Under its Whole Foods expansion plan, sources said Amazon wants to expand both services to nearly all of its roughly 475 Whole Foods stores in the U.S.
The online retailer is hopeful that such a move will help attract even more customers to Whole Foods and keep them coming back. If all goes to plan, it should also ensure that the number of people who subscribe to Prime keeps growing. The company recently revealed it saw "tens of millions" of new subscribers during the record-breaking holiday season.
Amazon’s pairing of Prime delivery with Whole Foods has helped to reverse the fortunes of the natural grocer. When the online retailer acquired Whole Foods in 2017, the supermarket chain was laying off staff to cope with slowing store growth.
Sales have since picked up, partly due to the convenience of Amazon’s delivery options. Data firm Numerator recently revealed that nearly half of the 1,200 shoppers it surveyed said they were shopping at Whole Foods more because of Prime promotions.
Amazon’s goal to boost sales through Prime discounts has so far had a negative impact on the company’s margins. However, this revelation won’t be alarming to investors as the online retailer is known to be willing to sacrifice profits in favor of chasing revenues.
Amazon has recently combined the ordering sites for its delivery service, Amazon Fresh, and Whole Foods Market, making it easier for customers of either service to place their orders. Prime members also receive free delivery when ordering from Whole Foods.