US Insights

Amazon puts Whole Foods in prime position

Meaghan Werle

Senior Analyst

Retail 02.09.2018 / 09:00


Amazon gives its first sign of how it will incorporate Whole Foods into grocery delivery.

Amazon announced that Whole Foods Market is now offering Prime Now on-demand delivery in select markets, with intentions to expand across the U.S. in 2018. While Amazon thus far has focused publicity on its in-store price cuts, this initiative is our first official indication of how Amazon will more deeply incorporate Whole Foods with its online grocery fulfillment options.

Through Prime Now, Prime members will be able to receive free two-hour delivery on thousands of items across fresh and everyday staples from Whole Foods Market. Once Amazon’s POS system is fully integrated with Whole Foods, it is likely that the entire store assortment will be shoppable via Prime Now. In doing so, this move elevates Whole Foods’ convenience proposition, while instantly boosting Prime Now’s fresh and natural grocery credibility.

Whole Foods Prime Grab

That said, Prime Now is the immediate way forward for Amazon’s fresh grocery delivery. As Prime Now becomes a more frequent part of shoppers’ routines, baskets now contain a broader mix of grocery and consumables, according to ShopperScape®. Likely driven by the new retailer partnerships that Prime Now has formed as well as a de-emphasis of general merchandise, the greater availability of Whole Foods’ selection on this platform will further accelerate Prime Now’s reach in these categories.

Prime Products Chart

What’s next for Amazon Fresh and Whole Foods’ Instacart partnership?

In turn, this calls into question the future of AmazonFresh, which gained Whole Foods’ 365 private label but also witnessed some market rationalization late last year. With Prime Now as the “chosen one” for Whole Foods’ wider assortment, Amazon is better positioning the service for the weekly grocery stock-up, in turn stealing trips from AmazonFresh. At the same time, this fortified on-demand offer also poses a significant threat to Instacart, which is entering year three of a five year contract with Whole Foods. To compete, Amazon will certainly leverage learnings from Whole Foods’ Instacart relationship as well as Prime-exclusive discounts to optimize the offering and convert Instacart shoppers to its service.  

Kantar Consulting Point of View: 

Ultimately, the roll out of Prime Now delivery at Whole Foods is no surprise given the recent appointment of Steve Kessel to oversee Amazon’s physical retail and fast-delivery operations. In fact, in Amazon’s Q4 2017 earnings call, Chief Financial Officer Brian Olsavsky alluded to greater collaboration between Whole Foods’ and Amazon’s online grocery platforms: “We continue to look at our whole offering of AmazonFresh, Prime Now, Whole Foods, how can they work together to create better and better offerings for our customer base” and this move is a clear reflection of that strategy. However, the omission of AmazonFresh from this Prime Now + Whole Foods delivery equation points to even more consolidation on the way. As Amazon brings more value and immediacy to Prime members at Whole Foods, watch for further scaling back of AmazonFresh service going forward.

In the near term, manufacturers should anticipate:

  • Rising focus on natural/organic and wellness products across Prime Now: How does your assortment align with these themes?
  • Increasing opportunity to cross-market inside Whole Foods, through Now solutions:  Know what trips and audiences will gravitate to this service. 
  • Mounting pressure from 365 products, as Amazon will look to assert Now’s value message:  Identify how your brands stack up to these items.
  • Shifting balance toward consumables over general merchandise: Assert the relevance of these cross-department solutions, particularly for seasonal and occasion-based needs. 


Source: Kantar Consulting

Editor's Notes

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