Amazon revealed during its third quarter earnings conference call that it is working with Whole Foods executives on new grocery store formats.
“There will be a lot of work together between Prime Now, AmazonFresh, Whole Foods, Whole Foods products on the Amazon site, (and) Amazon Lockers at the Whole Foods stores,” according to Amazon CFO Brian Olsavon.
Olsavon also said the company plans to open more Whole Foods stores.
Meanwhile, Whole Foods said last week that it will add in-store pop-up shops in select stores that feature technology products from Amazon. The stores will also provide information about Amazon’s Prime membership and Prime Video offerings.
Amazon announced earlier this month that it would discontinue its AmazonFresh grocery delivery service to select zip codes around the country. Customers in several states, including New York, Pennsylvania, New Jersey and Delaware, have reported receiving notices that the service would soon end.
According to a Planet Retail RNG analyst, Amazon’s Prime Now service, which provides grocery delivery in under two hours, appears to be more successful than AmazonFresh, which has been economically challenging to operate.
“There is some internal rationalization happening for Amazon in grocery as it integrates the Whole Foods stores into its business,” said the analyst. “While Instacart does have almost three-and-a-half years remaining on an agreement with Whole Foods to be its exclusive perishables delivery provider, I think Amazon long term will take this over, delivering groceries from Whole Foods stores using its own Prime Now program.”
“Amazon’s move today away from the AmazonFresh program is a clear second step in integrating Whole Foods, with many more moves to come,” said Spencer Millerberg, CEO of One Click Retail. “AmazonFresh on its own has not gained sufficient momentum in 10 years since it launched, while Whole Foods items on Amazon have been growing around 8% per week since launch.”
Analysts agree that Amazon will likely expand its e-commerce efforts in areas where Whole Foods operates in order to leverage the retailer’s brick-and-mortar presence.