Prime's delivery of Whole Foods could make Amazon a leading grocer

Prime's delivery of Whole Foods could make Amazon a leading grocer

Prime's delivery of Whole Foods could make Amazon a leading grocer

News that Amazon.com will start offering two-hour delivery from Whole Foods stores in four US cities has the food world buzzing that competition is about to heat up in an industry that survives on razor-thin margins.

Whole Foods Market in Virginia Beach is now offering Amazon Now free 2-hour grocery delivery service on orders of $35 or more.

Whole Foods announced the start of free two-hour delivery through parent company Amazon's Prime Now. The perk is now available in four cities (Austin, Cincinnati, Dallas and Virginia Beach), though the service is set to expand to the rest of the country later this year. Some alcohol selections are also available for delivery to customers. The purchase instantly made it the fifth-largest grocery retailer in the country, according to analysts at Cowen.

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There are about 60 million households in the US that use Amazon's Prime service, and only about 22 percent of those shopped at Whole Foods in December, according to research from Cowen & Co.

The biggest barriers, according to the same study, was that it was too expensive (40%) and had inconvenient delivery times (23%).

The announcement is the latest in Amazon's integration of the Whole Foods Market chain of high end organic supermarkets, which it bought in June for $13.7 billion.

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This announcement not only changes the shopping landscape for Amazon and Whole Foods customers, but for shopping in general.

"We're happy to bring our customers the convenience of free two-hour delivery through Prime Now and access to thousands of natural and organic groceries and locally sourced favorites", said John Mackey, Whole Foods Market co-founder and CEO. As Scott Webb, president of Avionos points out, the new option signals how Amazon is always striving to improve the customer experience. Many suppliers will see an increase in the $25,000 fee they had paid to be featured in the stores' most visible areas, and a nationwide promotion is now requiring companies to cut their prices by at least 25%. Amazon and Whole Foods will have to find a way to make consumers trust the people picking their groceries, and they'll have to be transparent about their process for that to happen.

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