Amazon has started experimenting with a unique approach to integrate Whole Foods and Amazon Fresh, aiming to streamline its grocery offerings. By merging the fulfillment networks of these two brands, Amazon seeks to give customers a wider variety of products, from organic produce to household essentials, all available from a single source.
A report from The Wall Street Journal states that Amazon has started shipping Whole Foods products from 26 Amazon Fresh fulfillment centers and is planning further trials to determine the benefits of this merged distribution approach.
Part of the strategy includes testing micro-fulfillment centers within select Whole Foods locations. In Pennsylvania, Amazon plans to stock a Whole Foods location with Amazon Fresh items, allowing customers to order products on their phones and pick them up at the store.
In Chicago, the company is experimenting with an "Amazon Grocery" concept, which stocks items not typically found at Whole Foods, aiming to attract a broader customer base.
Amazon's Strategy to Compete with Grocery Giants Like Walmart and Kroger
According to The Wall Street Journal, the move reflects Amazon's larger strategy to strengthen its presence in the $1.5 trillion US grocery market, an industry currently dominated by major players like Walmart and Kroger.
David Bishop, a partner at grocery research firm Brick Meets Click, noted that Amazon has yet to establish itself in the grocery market on par with these giants, who leverage their physical stores as distribution points. Bishop pointed out that physical stores are crucial for grocery shopping, as customers often prefer to handpick fresh items like meat and produce.
Despite challenges, Amazon is determined to innovate within the grocery sector. The company has already experimented with various grocery tech solutions, such as "Dash Carts" for scanning items during shopping, while moving away from certain technologies like cashierless stores, said The Verge.
