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October 27, 2017
The headline-grabbing Amazon-Whole Foods Market deal appeared as a mere 2.9 percent of net sales when the online giant reported its third-quarter earnings Oct. 26.
Amazon’s net sales increased 34 percent to $43.7 billion in the third quarter, compared with $32.7 billion in third quarter 2016. Net sales includes $1.3 billion from Whole Foods Market, which Amazon acquired on Aug. 28.
Since that deal closed, speculation has swirled around the industry as to why Amazon bought the supernatural retailer and how the retail chain will change.
Here’s what we know now from Chief Financial Officer Brian Olsavsky, who fielded questions during Amazon’s third-quarter earnings call.
Ownership is still in its early days, but Olsavsky highlighted Amazon’s quick moves to reduce price on key grocery items, launch Whole Foods Market private label products on amazon.com and add Amazon lockers at some Whole Foods locations.
The leadership teams are like-minded and customer obsessed, he said, which has Whole Foods ready to “expand its offerings.”
More integration and “touchpoints” will be visible as Amazon explores ways to serve customers using Amazon Fresh, Amazon Pantry, Prime Now and Whole Foods Markets.
Some may expand and some may become combined.
“There’s no one paradigm for all customer engagement, and we’re looking for the ones that resonate best with customers and we’re going to continue with those,” Olsavsky said.
The CFO confirmed that Whole Foods expansion will occur, but management is not ready to announce what that will look like.
“We’re experimenting with a lot of formats,” Olsavsky said. “I think Whole Foods really gives us a vast head start on that and a great base and a great team to work with who has a lot of history. They probably have 10 to 20 years of learnings that we don’t have and wouldn’t have.”
Amazon Prime will become a platform for a Whole Foods Market customer loyalty program. A timeline was not announced.
When asked about adding pharmacies at Whole Food outlets, the CFO answered simply: I cannot confirm nor deny rumors.
Senior Content Director, New Hope Network
As the senior content director at New Hope Network, Christine Kapperman combines her 20-year journalism background with her passion for business to cover the natural products industry for newhope.com and Natural Foods Merchandiser magazine. She also led content at worldteanews.com. She loves tracking (and tasting) trends as she shares what’s next to show up in cups, plates and in pantries across the United States.
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