Online retail giant Amazon is making its biggest move yet with Whole Foods by offering delivery from the grocery chain via the Amazon Prime Now service. They are only rolling it out in four markets to begin with – Austin, Cincinnati, Dallas and Virginia Beach. However, the company says it plans to expand the service throughout the U.S. The news is a realization of the grocery industry’s worst nightmares, which has been in near-panic mode since Amazon announced it was acquiring Whole Foods back in June of last year. Amazon says the move is aimed at applying the lessons the company has learned in 20 plus years of delivery to a new sector. Whole Foods employees will assemble the orders in stores and then Amazon contractors will make the actual deliveries. Prime Now members get free 2-hour delivery on orders of $35 or more. For an extra $7.99, they can get their order delivered in just one hour. Amazon has actually offered a limited number of Whole Foods items through its standard Prime service since January. The selection was limited to non-perishables however and was pretty narrow in scope. Available items through Prime Now expands the selection to thousands of choices, including fresh produce and even meat. The Wall Street Journal explains that it is ”the first major integration” between Amazon’s e-commerce operations and its 470 or so new brick-and-mortar stores. Amazon says it will also partner with other similar grocers, such as Sprouts Farmers Market. Obviously, this new plan is viewed as a huge threat to traditional grocery stores, which have all been racing at breakneck speed to up their own delivery game in anticipation of Amazon making such a move. The company’s venture into the brick-and-mortar grocery business has not exactly been smooth sailing. The most recent issue they’ve been grappling with is inventory shortages. Customers across the country have been complaining about empty and nearly-bare shelves. And it is not isolated to specialty items – things like bananas, popcorn and even bottled water. The problems seem to stem from an inventory system called “order-to-shelf” that is designed to reduce or eliminate the time goods are stored in the backroom. Whole Foods itself actually implemented the system before the Amazon takeover, so it’s been in place for almost a year now. Obviously, they still need to iron out some kinks. (Sources: Wall Street Journal, Tech Crunch, Forbes)
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