Will Amazon's Robot Warehouses Save Whole Foods or Seal Its Fate?
In this Fast Five Short, we discuss how Amazon is testing a new concept by integrating micro fulfillment centers into Whole Foods, allowing shoppers to order items online while in-store and pick them up at checkout. This strategy aims to consolidate shopping trips and expand the range of products available to Whole Foods customers, including popular brands not typically found in the store. However, the discussion raises critical questions about the potential impact on customer behavior, with predictions that it may lead to fewer visits to Whole Foods by its regular shoppers. The conversation delves into the implications of this shift on Whole Foods' overall viability and its long-term future under Amazon's ownership. Ultimately, the hosts consider whether this approach will enhance the shopping experience or diminish it by forcing consumers into a more fragmented purchasing process.
Amazon's innovative approach to grocery shopping is being tested with the integration of micro fulfillment centers at Whole Foods locations. This strategic move aims to enhance the shopping experience by allowing customers to order from Amazon's extensive product catalog while shopping in-store at Whole Foods. The pilot program in Plymouth Meeting, Pennsylvania, promises to combine the convenience of online shopping with the tactile experience of browsing physical grocery aisles. Shoppers can order popular items that Whole Foods does not traditionally stock, such as family favorites from Pepsi and Kellogg's. The discussion delves into the implications of this model, questioning whether it will attract non-Whole Foods shoppers to the store or simply reduce the frequency of visits from existing Whole Foods customers to other grocery retailers. As the hosts explore these dynamics, they ponder the potential impact on Whole Foods' brand and market position, including concerns about diminishing in-store experiences and the risk of alienating loyal customers who value the curated shopping atmosphere.
Takeaways:
- Amazon is testing robot warehouses at Whole Foods to streamline shopping and pickup experiences.
- The new micro fulfillment center in Pennsylvania will allow shoppers to order online items while in-store.
- This strategy could reduce shopping trips to other grocery retailers for Whole Foods shoppers.
- Concerns arise about the practicality of ordering products like soda while browsing in-store.
- The addition of mini warehouses questions the merchandising of products in Whole Foods stores.
- A potential outcome of this strategy could be the decline of Whole Foods as a brand.
Companies mentioned in this episode:
- Amazon
- Whole Foods
- Pepsi
- Kellogg
- Coca Cola
- Doritos
Thanks to the A&M Consumer and Retail Group, Avalara, Mirakl, Ownit AI, and Ocampo Capital for making this episode possible
For the full episode head here: https://youtu.be/T_30gGTzlZ4
This podcast uses the following third-party services for analysis:
Podcorn - https://podcorn.com/privacy
Transcript
Amazon is testing the addition of robot warehouses to Whole Foods so shoppers can pick up other orders at checkout.
Speaker A:Okay.
Speaker A:According to CNBC, Amazon is building a micro fulfillment center attached to a Whole Foods location in the Philadelphia suburb of Plymouth meeting, Pennsylvania.
Speaker A:Once the facility is operational within the next year, shoppers will be able to order items from Amazon's website and its online grocery service, Amazon Fresh, while browsing Whole Foods and pick it up in the store as they're checking out.
Speaker A:The arrangement would allow shoppers to buy staple goods from brands that aren't carried at Whole Foods Markets.
Speaker A:For example, the Pepsi, soda and Kellogg cereal that is on top of your kids list and may prevent some people still from going to a whole foods to complete their trip.
Speaker A:And now it taps into the vast online Amazon catalog of items.
Speaker A:Chris, this is the a and M.
Speaker A:The real, real, the real one.
Speaker A:Put you on the spot.
Speaker A:Question A and M wants to know.
Speaker A:In Amazon's play to consolidate trips and increase baskets through Whole foods, will the end of.
Speaker A:Will the end consumer impact here be more trips to Whole foods from non Whole foods shoppers or just fewer trips by Whole Foods shopper to other grocery retailers?
Speaker B:Oh, man.
Speaker B:Oh, Jesus.
Speaker B:That.
Speaker B:That might be my favorite question all time from a and m.
Speaker B:Yeah, but before I answer that question, I gotta give a shout out to Plymouth meeting, Pennsylvania.
Speaker B:Did you know there was a Plymouth meeting, Pennsylvania?
Speaker A:I didn't, but I didn't question it.
Speaker A:When I read it, I was like, sure, this makes sense.
Speaker A:Like, Plymouth meeting feels like where all the Pilgrims came and had.
Speaker B:Would you like to with the town created their name?
Speaker B:Like, I would love to abet in that room.
Speaker B:What should we call ourselves?
Speaker B:Well, we're meeting.
Speaker B:We're near Plymouth Rock.
Speaker A:In Plymouth here.
Speaker B:Plymouth Rock.
Speaker B:Let's call ourselves Plymouth meeting.
Speaker B:I don't know.
Speaker B:But anyway.
Speaker B:All right, back to the question.
Speaker B:So.
Speaker B:So will the end consumer impact here be more chips to Whole foods from non Whole foods shoppers or just fewer trips by whole food shoppers to other grocery stores?
Speaker B:It's amazing question.
Speaker B:I'm going to go.
Speaker B:I'm going to go bold on this answer, and I'm going to actually say that.
Speaker B:That when you combine this with what's going on in headline three and where Amazon is potentially heading, I think the answer is actually c.
Speaker B:I think it's going to mean, yes, fewer trips by whole food shoppers to other grocery retailers.
Speaker B:But if these headlines both play out as intended, it will also mean less trips to whole food stores by Whole Foods shoppers as well.
Speaker A:Okay.
Speaker B:Because how come?
Speaker B:And I say that for a couple.
Speaker B:First, the use case is just freaking silly.
Speaker B:Like, I can't stand the use case.
Speaker B:I'm standing in a Whole Foods and I'm going to go on my phone and order Pepsi.
Speaker B:No, it's not going to happen.
Speaker B:I can do that much easier from my couch based on what you're trying to put forward in headline number three.
Speaker B:So?
Speaker B:So if you believe the consolidated idea, people are going to gravitate towards that which ultimately leads, if you play this out, which ultimately means you're going to have less shoppers in Whole foods, which is going to mean less margin for Whole Foods over time, less long term investment in Whole Foods, in store experience.
Speaker B:And here's the thing, and this is where I'm getting bold, which ultimately is the eventual death of Whole Foods as we know it today and love it.
Speaker A:Wow.
Speaker A:Okay.
Speaker B:So which brings up an interesting que.
Speaker B:And here's why I say that, which brings up an interesting question.
Speaker B:If Amazon were to sell Whole Foods right now, would it be worth more or less than they originally paid for it?
Speaker A:Oh, God, I have no.
Speaker A:What do you think?
Speaker B:I don't know.
Speaker B:My guess is it would actually be worth less because Amazon has done nothing with it.
Speaker B:And now I think this headline, if they keep playing this out the way they are, this is essentially going to kill it because Amazon's mass market dominance is so strong in e commerce, that's going to pull people out of the actual store, which is going to create the death of Whole foods down the line.
Speaker B:That's, that's my prediction here, Zachary.
Speaker A:Oh, man, you've given me so much to think about in this.
Speaker B:That's why I love this show.
Speaker B:I got, I got, went down a big rabbit hole on this and I, I kind of think it's going to happen.
Speaker B:Like, if this is how it's going to play out, like, if you're trying to get people to buy Pepsi while they're in Whole foods, like, yeah, what are you doing here?
Speaker A:I don't disagree with you.
Speaker A:I mean, I think that that's what I was thinking.
Speaker A:Like, my biggest concern here is, like, these are mini warehouses right now and how much product can you actually fit?
Speaker A:Like, yes, we know Coca Cola and Pepsi and, you know, Doritos.
Speaker A:You can't buy in a whole foods.
Speaker A:But then, like, what?
Speaker A:So then I'm like, well, does it just make sense to start carrying these products inside of a Whole foods if you know that that's what it is?
Speaker A:Like, why are you going to put this to a mini warehouse and put the friction point on the consumer, then to have to like order that separately.
Speaker A:Like, why wouldn't you just start carrying it in your store?
Speaker A:But then, then you defeat the purpose of Whole Foods as a concept begin with.
Speaker A:So like that, to me, that, that brings up a really interesting point.
Speaker A:You know, I will say that this does kind of put some clarification to what Claire Peters was talking about last week at grocery shop when she said they were trying to consolidate trips and make shopping easier.
Speaker A:I wish we knew about this when she was talking because I think that would have straightened things out a little bit, at least under, given us an example of what to expect of what they're trying to do.
Speaker A:But, but ultimately, like, I just keep getting back to how much can they fit in there?
Speaker A:And are you still going to force me as a consumer to do another trip?
Speaker A:Because I don't know that, you know, in your mini warehouse, you're going to have all the things on my list that I could just let, to your point, walk into a target or walk into a Walmart and check all off my list in one, in one trip and be home and not have to do anything else.
Speaker B:But here's the thing.
Speaker B:You will from home because of headline number three, you will from home.
Speaker B:You will be able to get that delivered to your house from home because of the consolidation effort.
Speaker A:Right.
Speaker B:See, actually, I actually disagree with the point on clear Peters, too.
Speaker B:Like, I actually think this is just further emphasizing the fact that I have no idea what their grocery strategy is.
Speaker B:When you look at everything they have under their banners, like they have Amazon fresh, they have the Amazon website, they have, they have whole foods, they have these other retailers that are, the other part of this, too, is the other retailers that are selling through Amazon as well that I'm assuming will be part of this consolidated effort.
Speaker B:So if you have all of those happening, Amazon's going to pull a hell of a lot of e commerce volume from consumers over time.
Speaker B:But I don't think those same consumers are going to be the ones going into stores anymore to the same degree.
Speaker B:And so that means that the stores they used to frequent are going to struggle and whole Foods is going to be the prime one.
Speaker B:In my mind, that struggles.
Speaker A:Right.
Speaker A:And again, you just made me think of something else.
Speaker A:So the other part of this is still the stores issue that Amazon has and the whole problem with what the shopping experience is going to be like in the whole food store because I think this also takes out, like, you're still not having the discovery that happens a product in like, it shows you that Amazon's not thinking about the merchandising of that disc.
Speaker A:Like how are they going to put sock, are they going to put socks on display?
Speaker A:Is there going to be signage for Pepsi that you can order?
Speaker A:Like, how do you have that?
Speaker A:Those moments happen in a physical environment.
Speaker A:Fine.
Speaker A:That you know how to do it in a digital environment, like you said, and you'd order all that stuff to your house.
Speaker A:But like, what's this going?
Speaker A:How are they thinking still about what their groceries footprint strategy is?
Speaker B:That's a great point because my biggest lesson leading the store, the future project at Target is the last thing I wanted was a consumer to be on their phone looking for a product they can't get inside my store.
Speaker A:Yeah.
Speaker B:Because then they're missing all the merchandising that I am making the effort to put in front of them in the store.
Speaker B:Right.
Speaker B:So, yeah, that's a big disconnect when you get.
Speaker B:Right.
Speaker A:So what do you think is going to happen?
Speaker A:Like, do you think that they're going to, like one?
Speaker A:Do they have enough product to test this in those mini, like, I still go back to like, what's in the mini warehouses, how many?
Speaker B:I just don't think it's.
Speaker A:You don't think so you think this will be like killed as a test and it's not?
Speaker B:I think it's a fun thing to talk about.
Speaker B:I don't think consumers will actually do it.
Speaker B:I think they'll either do it, they'll either coordinate the order before they get there or they'll just order from home and never leave their house.
Speaker B:Like, that's what going to happen.
Speaker B:Like, I'm not going to be standing in the chips aisle and go, oh, you know what?
Speaker B:I can pull out my phone now and I'm going to order a bag of tostitos for the party I'm going to have.
Speaker B:Like, it's just not going to happen that way because it's maybe as a one off, but that's not going to move anything.
Speaker B:So ultimately what I think is going to happen here is I think Whole Foods is either going to go struggle or it's actually going to get sold, which is why I thought of the question of like, how much is it worth right now?
Speaker B:Is it worth more or less since Amazon took it over?
Speaker A:Right?
Speaker A:No, it's a great point.
Speaker B:Maybe it could be worth more to somebody because they could probably do something creative with it.
Speaker B:I don't know.
Speaker A:All right, people, we want to hear send us your send us slide into the DM's and tell us what you think about this one.
Speaker B:I always love when we get thinking in real time.
Speaker B:We never know the conversation is going to go and we start thinking in real time.
Speaker B:It's always dangerous.
