Amazon clearly has big plans for Whole Foods once its $13.7 billion purchase of the organic-grocery chain is official. While much of the discussion around the merger has centered on Amazon initiatives like Prime Fresh, Amazon Go, and a possible meal-kit delivery service, the combination of the two companies could offer Amazon other benefits that it lacks in its current delivery-centric shopping model.
Case in point: Amazon’s brick-and-mortar stores. Whole Foods could provide a network of locations where, tucked into an Amazon-branded corner of the grocery store, Amazon shoppers not only pick up and return goods they’ve ordered through the ecommerce store, but also browse the selection of books that Amazon offers through its handful of bookstores. And, more importantly, check out the latest Amazon devices.
During the company’s recent earnings call, CFO Brian Olsavsky barely mentioned the Whole Foods deal except to say he was excited about it. But he rambled on when asked about Amazon’s brick-and-mortar bookstores, and how it’s helping drive interest in gadgets like the Echo and Kindle:
On the place of physical, again, as I mentioned in the earlier question, we are experimenting with a number of formats. You’ve seen the physical bookstores, and I would say that the benefit there is again, we have a curated selection of titles and it’s also a great opportunity for people to touch and feel our devices and see them, especially the new Echo devices. I went into the store in Seattle last week and I saw about a third of the people were standing around the device table learning how they work, how they interact with devices. So, I saw firsthand the customer experience, I think, that’s what we’re seeing as a benefit to the physical stores right now.
Of course, Amazon hasn’t said publicly whether it’s planning such a move, but the company is surely examining all the ways it can benefit from its grocery purchase. And it’s easy to imagine the barrage of Amazon services that could become available at 400 Whole Foods locations across the United States once the acquisition is made final.
Online shoppers may be able to get orders fulfilled quicker or pick up large or perishable orders at their local Whole Foods, but the stores could also be a great place to play with the latest Amazon tech.
The Amazon experiment with brick-and-mortar stores began slowly, with its first bookstore opened in Seattle in 2015. Today there are eight Amazon bookstores, with five more on the way for the San Francisco Bay Area, Los Angeles, New York, and Seattle.
Amazon is also exploring stores to sell home appliances, electronics, and furniture, anonymous sources told the New York Times this spring. It’s unclear at this time if those sources were talking about another set of stores, or if part of that vision includes Whole Foods.
By next year, an anonymous source told the New York Times, Amazon wants to open more AmazonFresh Pickup locations and expand Amazon Go stores to cities in the U.S. and U.K. The company has also sought approval from the Indian government to open online and physical food stores in that country.
Since Apple began to open glass cube stores in the early 2000s, tech giants have used brick-and-mortar locations to offer customer support, device repairs, and software tutorials, in addition to selling and showing off their latest gadgets.
Amazon hasn’t released a new Echo since the first one in November 2014, but it has pushed a series of iterations in the past few months. The Echo Look came out in April. Still in private beta, it uses computer vision to help you get dressed and make fashion decisions. The Echo Wand scans grocery barcodes, sticks to your fridge, and also has Alexa inside. The Echo Show meanwhile came out a few weeks ago with a visual user interface.
Companies that leverage Alexa Voice Service to bring Alexa inside their products could also be showcased in Amazon stores. Whether Amazon acquires spatial data from robot vacuum maker iRobot or not, Amazon home robots could be demoed by wandering around Whole Foods.
Price has been the biggest determinant of what smart speaker shoppers are willing to buy, according to a Morning Consult survey. Some home robots today, like Asus Zenbo and Mayfield Robotics’ Kuri, retail for $600 and $700.
That works for Whole Foods, a company with a reputation for attracting the kind of middle and upper class shoppers who might be more willing to be first adopters of expensive home robots instead of, say, a $50 Echo Dot.
Amazon is getting into the business of physical stores precisely to give people the ability to experience things in person, and that extends to its products. As Olsavsky says, there will be crossover. In addition to his comments during the call, there’s another hint at Amazon’s physical store strategy: Upon visiting the Amazon Books homepage, one of the very first things you see is an Echo Show ad to “test drive in store today.”