THE CLARUS Blog

How Prime Benefits at Whole Foods can Change the Grocery Industry

Amazon announced plans to acquire Whole Foods 11 months ago. There has been speculation regarding how the Prime benefits at Whole Foods would be integrated.

Now, on the heels of Amazon’s announcement last week that it will raise the price of Prime membership for U.S. customers, sources say that Amazon is planning brand new benefits for its Prime customers that shop at Whole Foods.

Here’s an interesting statistic to ponder: Roughly 75 percent of Whole Foods shoppers are Amazon Prime members, but less than 20 percent of Amazon Prime members are Whole Foods shoppers.

Given those numbers, coupled with Amazon’s recent announcement that it eclipsed 100 million global Prime members, the possibilities here seem boundless to elevate the integration of the Amazon Prime program and Whole Foods customers.

Prime Benefits at Whole Foods will Offer Customers Speed and Value

That speed, value, and special treatment Amazon Prime members receive will be evident now in the grocery industry at Whole Foods.

Subscribers already value Amazon Prime for its free two-day shipping, rich video content, and free photo storage, among other features. But Amazon has even bigger plans.

Amazon has been preparing for its momentous foray into the grocery industry. Almost silently developing its online grocery competencies through Amazon Prime Pantry and AmazonFresh.

For Whole Foods, the potential to tap into the sheer volume of new customers via the Amazon Prime premium loyalty program is unprecedented. This could change the grocer’s trajectory.

Prime members are already receiving other perks: Free delivery of Whole Foods products to Prime members in certain locations. Using Amazon’s Visa rewards card at Whole Foods will also entitle members to 5 percent cash back.

Whole Foods, which has 461 U.S. stores, ended its loyalty program on May 2. It added that new benefits would come soon. Could this be it?

In a press release last August, Jeff Wilke, CEO of Amazon Worldwide Consumer, talked about the company’s commitment to Whole Foods.

“We’re determined to make healthy and organic food affordable for everyone,” Wilke said. “And this is just the beginning–we will make Amazon Prime the customer rewards program at Whole Foods Market and continuously lower prices as we invent together.”

Customer Needs at Center of Every Move By Amazon

The needs of the customer are at the center of every move that Amazon makes. This is why this move is a crucial moment for the grocery and loyalty industries as a whole.

It’s especially pivotal now since consumers have a variety of non-traditional options to buy groceries. If Amazon seamlessly integrates Amazon Prime into its Whole Foods stores, it could create an unparalleled shopping experience that offers fresh food, convenience, and low prices.

What’s more, competitive grocery chains could feel the same pressure that traditional retail has from Amazon in the past decade.

I have spoken to various loyalty industry experts since Amazon first announced plans to acquire Whole Foods. Most believe that Amazon is poised to become the first company to achieve success with online grocery.

Laying the Groundwork For Entry Into Grocery Market

Amazon has been methodically laying the groundwork for years with infrastructure investments and an unrelenting emphasis on speed and value. For example, it seems likely that Go is a proof of concept to use “just walk out” technology in Whole Foods.

The Prime program gives members a special feeling and established a very loyal customer base. Customers appear eager to follow them into other markets.

This also places pressure on everyone from the big-box retailers like Walmart to niche grocery alternatives like Blue Apron.

Amazon and Whole Foods Market plan to offer more in-store benefits and lower prices for customers. Over time the two companies will integrate logistics and point-of-sale and merchandising systems.

As the gold standard premium loyalty program, Amazon Prime has been able to fill the gap between what people expect from these kinds of programs. Both on a rational and emotional basis–via innovation and technology.

Shift Toward Premium Loyalty Programs Is Real

This shift toward premium loyalty programs is real. The attached value proposition simplifies everything for consumers and creates a seamless and powerful vehicle that magnifies brand loyalty.

Based on changing consumer expectations, Amazon Prime often forces retailers to rethink their respective customer loyalty value propositions.

Amazon’s focus is and has always been on its customers and taking the friction out of shopping. By adding Whole Foods benefits to Prime, 100 million consumers now have a very good reason to shop there – or better yet – a reason not to shop elsewhere.

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