June 21, 2017 | Eric Feinberg

Wall Street’s reaction to Amazon buying Whole Foods can be explained through CX

Grocery CX

The news of Amazon’s Whole Foods acquisition sent the stock prices of many major grocery chains plummeting. At first glance, this may seem odd since Amazon is a relative new comer to the market and Whole Foods has struggled to maintain upward momentum in the last few years. In reality, it seems like a pretty obvious reaction by Wall Street.

Why? Well, it boils down to three big things.

First of all, Amazon’s commitment to customer experience (leading it to delve into areas like delivery) has allowed its patience to let its strategies unfold without too much interference by outside market forces. That’s one reason the grocery industry hasn’t had much success with online shopping, which Amazon has an advantage on. As I previously wrote, Amazon’s push into physical stores will look a lot like a Retail Mullet (showroom business in the front, distribution hub “party” in the back) — able to cater to both online and in-person customers.

The second big reason for Wall Street’s reaction has to do with Amazon’s position, which is potentially more helpful than industry leader rivals in that Amazon can more quickly adapt the in-store experience to mesh with its robust online shopping services. Companies like Walmart are still building and evolving the online portion of the business, which puts them at a disadvantage compared to Amazon/Whole Foods.

But perhaps the biggest reason is Amazon’s ability to utilize its existing customer experience data (for which there is much when factoring in AmazonFresh, Prime Pantry, Amazon Go, and more) to build an online grocery shopping business that could take a sizable chunk out of the $800 billion annual revenue the category generates.

Any way you slice it (like an organic avocado), the reaction by Wall Street can be tied back to customer experience. It’s no wonder a company like Amazon with a track record of success (not to mention a stock price hovering around $1,000) sent shockwaves throughout the grocery industry, as should a Whole Foods following in Amazon’s customer-focused footsteps.

Learn more about how CX data can provide better insights to help achieve business goals by reading our recent report, ForeSee Experience Index: Digital Contribution, or by contact a ForeSee representative.

Categories: Retail

About the Author

Eric drives ForeSee’s marketing strategy, working closely with the company’s product, client service, and sales teams to infuse innovation and operational excellence into its offerings. Since joining ForeSee in 2004, he has contributed to the organization’s strategic growth, particularly providing leadership around mobile solutions. He is the author of several of the company’s thought leadership studies, including the 11th annual ForeSee Experience Index (FXI) and the American Employee Study. Eric is a frequent speaker on customer experience analytics, and marketing best practices. He is a board member of the Digital Analytics Association (DAA) and an adjunct professor of mobile marketing at the University of California, Irvine Extension. Previously, he worked as a web analyst, multichannel strategy consultant, usability specialist and focus group moderator. Eric is a graduate of the University of Michigan.

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