The following article written by ForeSee VP of Marketing Eric Feinberg was first published via RetailCustomerExperience.
Amazon’s multi-billion dollar acquisition of Whole Foods has already sent eruptions throughout the grocery industry, including a decline to stock prices for competitors. It’s prompted a slew of commentary from the business media about how Amazon’s plans will unfold and the broader industry impact. Surprisingly, not much has been said about the real logic behind the deal, which has far more to do with Amazon expanding into an area it knows it can win, and far less to do with battling rivals such as Walmart.
It comes down to two main factors: Amazon’s commitment to customer experience and its plans to integrate physical and online shopping. As I previously wrote, Amazon is executing on a Retail Mullet strategy, meaning it will utilize the showroom in the front to entice customers while running a distribution hub in the back of stores. With the addition of Whole Foods, this Retail Mullet strategy will soon become a reality.
Below are three ways this concept will dictate what an Amazon-owned Whole Foods will look like and how it fits into a larger Amazon strategy.
New distribution centers across the country (business in the back)
It’s been mentioned before, but the acquisition provides Amazon with 465 physical stores across the U.S. in prime real estate locations. These stores are in mostly high-end, well-trafficked areas – and pretty much all of them contain all the sorts of equipment you’d need if you were planning to roll out a huge home delivery service for groceries. These stores also contain mostly high-end customers congruent to Amazon’s core Prime customer base…
Read Eric’s entire article on RetailCustomerExperience.com: “Amazon’s Whole Foods deal proves the ‘retail mullet’ is the future of grocery“