After Amazon’s takeover of Whole Foods last year, America’s grocers are concerned that they will not be able to get by in the face of Amazon’s rapid competition.
Grocery stores usually operate on very slim margins (around $1-$3 dollars for every $100 spent by customers). But Amazon’s grocery business could steer those profits away too.
Amazon’s CEO Jeff Bezos announced that he has great plans for Whole Foods and the grocery sector as the company plans to expand in the real world, not just online. To make it happen, the e-commerce giant is in the midst of revamping its logistics to offer customers ultra-fast delivery times.
Whole Foods could get orders to some customers’ doorsteps in two hours for free. However, the ultra-fast delivery is only available in a handful of cities including Austin, Dallas, Cincinnati, and Virginia Beach.
Amazon’s Aggressive Marketing Strategies Intimidate America’s Grocers
The company is aggressively promoting its smart speakers, Amazon Echos, via Whole Foods locations and has offered Amazon Prime members exclusive deals on turkeys for last Thanksgiving.
On Tuesday, Amazon notified Prime shoppers that they will be able to get their groceries at a 5% discount if they use the Amazon Rewards loyalty card. What’s more, if those purchases are made online, the discount will still apply. If you’re not a Prime member, you’ll get just 3% discount.
So, it is no wonder that grocery chains like Albertsons are scrambling to obtain a competitive edge against Amazon. Albertsons has recently announced a multi-billion deal to buy Rite Aid. In the wake of the merger a $24 billion company is expected to emerge.
Last fall, Albertsons purchased Plated, a startup that delivers healthy meal kits to customers’ homes, for $200 million. The grocery giant also inked a partnership with delivery service Instacart a month later.
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