The Amazonification of earth is about to accelerate drastically as Jeff Bezo’s online pet project sets its crosshairs on the grocery business.
According to the Wall Street Journal, Amazon plans to open dozens of its own grocery stores across the United States. It’s important to emphasize that these stores will be Amazon’s own. If you’ll recall, Amazon bought Whole Foods for almost $14 billion just two years ago. That venture, which has gone medium at best and created a culture clash for the grocer with the Kale Green logo, will have nothing to do with Amazon’s future foray into food.
Grocery giants like Walmart, Kroger, Costco, and Target reacted to the announcement by seeing their share prices fall immediately.
So, what does it mean for Amazon to build grocery stores – for a reported $9 million each – as an aside to its business with Whole Foods? The freedom to stock Cokes, lotions, and toilet fresheners. Which is to say, items that wouldn’t be permitted within an avocado’s throw of Whole Foods. According to TJI Research, Amazon has around 140 of its own food, health, beauty, and household essentials brands. Why not surround them with foot traffic? Admittedly, it’s a pretty uninspiring pitch: “Get the artificial colours, flavours, or sweeteners our subsidiary won’t stock for a few cents cheaper than Walmart.”
Of course, Amazon can offer shoppers a couple of nice things: discounts for Prime members and a completely autonomous shopping experience.
There’s a comment to be made about the prospect of replacing humans with algorithms and entering a race to the bottom with established discounters like Walmart and Costco, but shirking those concerns is essentially the reason Amazon is where it is.