Whole Foods, which, while offering healthy foods, has sometimes gone by the moniker, “Whole Paycheck.” In a bit of a price reprieve, Amazon, which purchased Whole Foods last year, is offering its Prime members an additional 10% off sale items when they shop at Whole Foods.
Whole Foods Discounts To Start in Florida
It is expected that the new discounts will start in Florida and expand nationwide later this summer after a brief test. Prime members will receive the additional discount on hundreds of products throughout the stores.
Earlier this year, the companies launched free two-hour delivery on Whole Foods groceries in 10 test cities, through Amazon's Prime Now service. Amazon is expecting to expand that offering later this year. Eligible Prime members also receive 5% back on Whole Foods purchases when using the Amazon Prime Visa card.
Is Whole Foods Just The Start?
As CNN Money notes, the situation will ultimately be a win-win for Amazon. The goal actually appears to be quite simple. Amazon wants to sign up more Prime members, but wants to get more Prime members into Whole Foods. "Maybe grocery is to Amazon in the next decade what books was in the '90s," said Michael Pachter, an analyst at Wedbush. With more than 100 million Amazon Prime subscribers around the world, at least 60 million subscribers are in the United States, Pachter estimated.
One would think that with such a large amount of customers, Amazon would have a huge cut of the market. However, it’s a small cut when it comes to groceries.
Right now, Whole Foods accounts for about 2% of US grocery sales, Pachter said. That leaves a ton of room for growth.
"Amazon has a relationship with [about 60 million households] in the US, and [these people] are definitely big consumers," Pachter said. "Why not drive their traffic into Whole Foods?"
In addition to the aforementioned 10 percent discount, Jim Fosina, CEO of Fosina Marketing Group, a marketing firm for subscription services, thinks the benefits will likely continue for grocery shoppers.
"I think you're going to see much more of Amazon using Whole Foods to become the dominant provider of grocery," he said.
Similarly how Target has done with their redCard, giving customers the option to save 5% on all purchases with a debit or credit card option, Amazon is doing the same with their Prime membership. If you shop at Whole Foods, it becomes less sensible to do so without Prime.
"Amazon's goal is to increase Prime membership," according to Scott Neslin, a marketing professor at Dartmouth's Tuck School of Business. "They believe this locks in the customer and induces them to buy more from Amazon."
The increasing uptick of Whole Foods discounts should only help to boost Prime's value.
"At some point, the Amazon Prime membership may become as critical to the consumer as their cell phone and data plan," says Fosina. "That's what I believe Amazon is aspiring towards."