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Whole Foods Market moves the needle in natural retail e-commerceWhole Foods Market moves the needle in natural retail e-commerce

Could a rumored acquisition of My Natural Market set off a chain reaction among natural retailers?

Connor Link 1

October 20, 2014

3 Min Read
Whole Foods Market moves the needle in natural retail e-commerce

As competition heats up in natural, organic and specialty retail, Whole Foods Market has pulled ahead of the crowd with its 2014 investments in e-commerce.

Partnerships with Instacart, Apple Pay, and a rumored acquisition of My Natural Market have industry abuzz with excitement over the future of online grocery and how the natural retail market can expect to fit in.

In September, Whole Foods inked a partnership with San Francisco-based Instacart, a one-hour delivery service that links customers to personal shoppers through a mobile app. With services in 15 cities, Instacart should add incremental sales at low overhead for Whole Foods and help improve profits at key store locations.

"When you think about the profitability of an incremental store,  there are a lot of fixed costs," said retail consultant Bill Bishop, of Brick Meets Click. Staff, rent, management--it all adds up. Adding extra sales at low cost, as with Instacart, can be a huge boon. "When you get that extra dollar of sales, your store can be three to four times more profitable than the average."

Since the partnership with Whole Foods began in early September, Instacart has seen growth across all its locations, said general manager Heather Wake. The company plans to increase its footprint in coming months, Wake said, as well as to embed personal shoppers into Whole Foods locations for exclusive shopping. The program has been rolled out in Austin, Boston and Chicago and will continue to move into new markets.


Also on the table for WFM is its rumored plan to acquire pure-play online grocery delivery service My Natural Market. Though as of yet unsubstantiated, the rumor is certainly not out of the realm of possibility. In fact, it would make good business sense.

"There's a parallel with Kroger buying Vitacost," said Bishop. "If you can buy an existing platform for customer engagement, you got a twofer. It's additive business plus a platform you didn’t have to invest in creating years ago." Kroger completed its purchase of the online supplement seller in August for $240 million.

Takeaways for independents

So what do you do if you don't have $240 million lying around to purchase a full-fledged e-commerce business?

Bishop said that natural retailers don't need to worry too much about selling online yet, but they should at least be more aware of online grocery: "Are you up to date with your thinking about digital? Are you up on consumer needs?" Most retailers have a way of keeping in touch with their consumers--perhaps it's worth opening up the conversation about whether online retail appeals to them.

Instacart, for one, serves a broad variety of consumers and demographics, and it varies by city. "We see a lot of families with children, professionals who work a lot, parents who deliver to their kids at college," said  Katie Alex, Instacart's city manager for Boulder, Colo.

Since natural retail depends so much on specialty items that require specific searching, it's an appropriate fit for online sales. Natural retailers need not jump the gun on e-commerce, but let's at least start to explore the world beyond a website and a Facebook page.

About the Author(s)

Connor Link 1

Senior Editor, New Hope Natural Media


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