Article by Bill Murphy Jr.
CREDIT: Getty Images
Amazon just announced how it’s changing Whole Foods–and at the same time provided our latest answer to the question: Just how powerful is Amazon, anyway?
Because we already knew it’s powerful enough to dominate 43 percent of all online commerce, and powerful enough to basically acquire Whole Foods for free, since Amazon’s stock jump after the original announcement was more than the Whole Foods purchase price.
Update/Related story:Â Whole Foods Is Part of Amazon Now, So I Stopped By Monday After Work (Here’s What’s Different)
But now, we also know it’s apparently powerful enough to wipe out billions of dollars in competitors’ companies with a single, simple sentence. That sentence? It came in the middle of a press release Thursday:
“Starting Monday, Whole Foods Market will offer lower prices on a selection of best-selling staples across its stores, with much more to come.”
Boom! Amazon’s announcement came at about 1:45 p.m. Grocery competitors like Kroger, Sprouts Farmers Markets, and SuperValu immediately saw their stock tumble, wiping out billions of dollars in value, The Wall Street Journal noted. Other competitors like Wal-Mart, Costco Wholesale, and Target also fell hard.
The grocery business is notoriously low margin–hovering around 1 percent. So Amazon’s acquisition of Whole Foods Markets has struck fear in the hearts of its new competitors (or at least their investors). Thursday’s announcement almost seems like it should have already been taken into account in its competitors’ prices, but maybe this was sort of a “oh man, this is really happening” moment.
“We’re determined to make healthy and organic food affordable for everyone,” Jeff Wilke, CEO of Amazon Worldwide Consumer, said in the press release. “Everybody should be able to eat Whole Foods Market quality — we will lower prices without compromising Whole Foods Market’s long-held commitment to the highest standards.”
(By the way, Amazon uses the title “CEO” in an unusual way. Besides Jeff Bezos of course, it counts Wilke as the CEO of its worldwide consumer division, and Andy Jassy is CEO of Amazon Web Services. Meantime, Amazon says John Mackey will remain as CEO of Whole Foods — and there’s also Tony Hseih, still CEO of Amazon-owned, Zappos.)
Here are the changes that are coming to a Whole Foods near you, in greater detail. In short, they’re cutting prices across the board — and as many have predicted, will ultimately be adding more benefits for Amazon Prime members.
- First, Amazon said it would cut prices immediately on many products, including: “bananas, organic avocados, organic large brown eggs, organic responsibly farmed salmon and tilapia, organic baby kale and baby lettuce, animal-welfare-rated 85 percent lean ground beef, creamy and crunchy almond butter, organic Gala and Fuji apples, organic rotisserie chicken, 365 Everyday Value organic butter, and much more.”
- Second, “after certain technical integration work is complete, Amazon Prime will become Whole Foods Market’s customer rewards program, providing Prime members with special savings and other in-store benefits.”
- Next, Whole Foods Market’s private label products “will be available through Amazon.com, AmazonFresh, Prime Pantry, and Prime Now.”
- Finally, for now, “Amazon Lockers will be available in select Whole Foods Market stores.”
Yeah, I can imagine if I were running a competing grocery store chain, I might be a little bit worried. It’s Amazon’s world now; the rest of us are just living in it.
