After the acquisition of the US natural food supermarket Whole Foods, Amazon has aggressively promoted these 9 reform measures.
US e-commerce giant Amazon (Amazon) announced in June this year that it would buy US natural food supermarket Whole Foods Market for US $13.7 billion. The deal was officially completed in August (see "Gorgeous Records" report: Amazon spent US $13.7 billion to buy US natural food supermarket Whole Foods, and the share prices of competitors such as Wal-Mart plummeted). After Whole Foods was acquired by Amazon, in addition to the price cuts mentioned in previous reports, Amazon has announced a number of reforms.
According to the Wall Street Journal on Thursday, after the acquisition of Whole Foods, Amazon is trying to make its operations closer to the traditional market. Here are 9 big changes that have occurred since Whole Foods was acquired by Amazon:
1) Price reduction
On the day the acquisition was officially completed, Amazon cut prices on many of Whole Foods's products (see Gorgeous: Amazon's top priority after acquiring Whole Foods, a U.S. natural food supermarket: price cuts!), The price cut is up to 40 per cent.
A reporter from the US website Business Insider visited a Whole Foods store in Brooklyn (below) and found that the price of a product has been reduced from the previous $97.76 to the current $75.85.
2) Sell Amazon smart speakers Echo and Echo Dot
Amazon said the line of voice-activated voice devices will be sold at designated Whole Foods stores. The Brooklyn Whole Foods store, pictured below, has gone on sale with a promotional ad that reads: "Amazon Echo, the Season's Choice".
3) Implementation of Amazon Prime membership system
Whole Foods has announced that the Amazon Prime membership system will replace Whole Foods' current loyalty program.
4) Sell Whole Foods products on Amazon
Since Amazon acquired Whole Foods, about 2000 Whole Foods own-brand products have joined Amazon's website and various services, including Amazon.com,AmazonFresh,Prime Pantry and Prime Now, and most of these products have been sold out. According to Amazon, sales of Whole Foods brand products reached $500000 a week after landing on Amazon's e-commerce website.
Currently, for many Whole Foods items, a AmazonFresh membership is required to purchase them. AmazonFresh is Amazon's fresh delivery service, which Prime members can enjoy for an additional $14.99 per month.
5) Brand promotion representatives will be banned from entering the store
Whole Foods will no longer allow brand promotion representatives to enter stores to promote products or to inspect product storage and display.
6) Local stores no longer have the right to decide on the sale of regional products.
According to the Wall Street Journal, Whole Foods will decide whether to sell or not according to the national product classification. In order to prevent brands from frequently marketing their products to local Whole Foods stores, Whole Foods management will select products with higher market share.
7) Set up Amazon Locker to pick up containers in the store
Customers can place orders online, pick up goods from Amazon containers located in Whole Foods stores, or use Amazon containers to return goods.
8) Business scale continues to expand
Whole Foods not only didn't cut jobs, it hired more staff.
9) Consolidation of point-of-sale terminal systems
It doesn't have much impact on ordinary shoppers, but this measure can allow more brands sold in Amazon to land in Whole Foods stores.
Does the price cut work?
For Amazon, entering the physical retail market still faces great challenges. The very high cost of fresh goods has plagued Amazon for a decade. Even now with Whole Foods, Amazon is still a newcomer to the grocery market. The $800 billion grocery market is dominated by giants like Walmart (Wal-Mart ),Kroger Co. and Albertsons Cos., while Amazon has less than 2 percent of the market.
Whole Foods, known for its high-end, organic food, has stagnated in recent years. With Wal-Mart, Kroger grabbing share of the organic food market, Whole Foods is in dire need of a change.
According to Bloomberg News, a survey by social location service Foursquare Labs found that traffic has increased by about 25% since Whole Foods cut its price.
The Foursquare also found that Whole Foods had more pronounced store traffic growth in some areas. Whole Foods in Chicago, for example, recently saw a 35% increase in traffic. This is an exciting signal for Amazon, which hopes to open up the physical retail market through Whole Foods. The final effect of the price reduction depends on the profit performance of Whole Foods.
After the new management stepped in, there was a precedent before Amazon and Whole Foods:
In 2011, Ron Johnson became CEO of department store JC Penney and cut prices across the board, replacing previous regular coupons and promotions with low prices. But the new policy ultimately failed, and it turned out that JC Penney's customers liked to shop during promotions so they felt like they were "making money". Until today, JC Penney is still not completely out of the downturn, especially in the physical retail downturn in the past two years.
However, Whole Foods and JC Penney are in a different situation. Although the price of goods is high, people like to shop at Whole Foods because the positioning of Whole Foods high-end stores also virtually enhances the social status of shoppers, which brings opportunities for Amazon. So Amazon's price cut on Whole Foods may be wise, after all, Whole Foods had given up some of its benefits even before the price cut.
SOURCE: Consolidated US website Business Insider, Bloomberg, Forerunner
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