With its planned acquisition of Whole Foods, Amazon may finally gain access to shopping behavior it has long sought — in store. With Whole Foods rolling out its own reward program this year, there are added opportunities to correlate insights. We share five changes loyalty marketers should expect.
With its pending purchase of Whole Foods, Amazon has better than a six-in-10 chance of knowing exactly how many apples it takes to upsell a shopping cart.
We mean that literally. An estimated 62 percent of Whole Foods shoppers are also members of Amazon Prime, according to The Wall Street Journal. If those members share their Whole Foods purchases with Amazon, they’ll deliver insights into in-store shopping behavior this online giant has long thirsted for.
How fortuitous, then, that Whole Foods is also in the midst of rolling out its own rewards initiative. The program has been in test mode in Philadelphia and Dallas since September 2014. Now, according to its first-quarter report, Whole Foods plans to expand the program to all U.S. stores by the end of 2017.
The Amazon Prime membership program likely has the resources to combine and correlate Whole Foods’ insights with its own. The challenge will be doing so in a way that customers do not find invasive or confusing. Based on expert interviews, news reports and the transcript of an employee town hall presentation by the CEOs of Amazon and Whole Foods, we detected five changes shoppers and loyalty marketers might see.
1. It’s business, so it will get personal. Amazon’s analytical resources should enable Whole Foods to develop much more effective (meaning accurate) personalized offers. This is no small feat, according to the recent report “The Shoppers’ Guide to Restructure Retail” by WSL Strategic Retail in New York. Of nearly 2,800 shoppers surveyed for the report in February and March, just 19 percent said they used the personalized offers they had recently received, often because the offers were for products they did not use, said Wendy Liebmann, CEO. “What’s really noteworthy is of those who did use personalized offers, just 42 percent were satisfied,” she said. “But they were satisfied for good reasons, like feeling the stores knew them very well.” Survey respondents ranked Amazon’s personalized offers highest for satisfaction, she said, at 54 percent.
2. Improved in-store experiences. Whole Foods offers a generous employee compensation program that includes stock option awards to encourage high performance. As a result, the chain is known for good service as well as the quality of its prepared foods. Still, CEO John Mackey thinks it can do better. And he expects Amazon to be the guide. “I think, sometimes, our company’s gone a little bit too much team-member focus at the expense of our customers,” he told employees at a June 16 town hall meeting. “And that’s one definite evolution that’s gonna happen … They put the customer first in everything they do and think backwards. We’re gonna be the same way.”
3. Greater manufacturer involvement. Amazon has a twofold relationship with product suppliers such as Kellogg’s and Procter & Gamble: It’s both a retail partner and media supplier, offering precision-targeted ads based on consumer purchase data. This dynamic will give Amazon a significant advantage over traditional grocery retailers once it integrates Whole Foods shopper data, said Allen Mason of the marketing strategy and consulting firm Allen Mason Consulting in Cincinnati. “I expect to see an acceleration of Prime Pantry (where Prime members shop for groceries and household products) and potentially specific offerings to Whole Foods shoppers, post-acquisition, which will result in shoppers moving more purchases out of traditional retailers to online with Amazon,” he said. “Combined with subscription replenishment, Amazon will be able to build the ultimate loyalty relationship with Whole Foods shoppers across a wide spectrum of product categories.”
4. Offers by Alexa. Industry observers are already envisioning Amazon’s virtual assistant, Alexa, handling the grocery lists of Whole Foods shoppers. It also can work like a loyalty program manager, providing purchase-related details regarding points earned, past buys, replenishment reminders and offers. She also could pipe up with special deals when the shopper reviews or adds to an existing shopping list. Much like Amazon suggests that we might like a certain T-shirt if we purchase a certain book, Alexa may propose that if a shopper likes almond milk, she may also be interested in a recipe for almond milk rice pudding. This could result in the sale of a cookbook as well as the ingredients. It’s worth noting that Amazon recently added Alexa to its shopping app, so Whole Foods shoppers could possibly chat with the virtual assistant through their iPhones or iPads.
5. Payment opportunities will flourish. Amazon Prime counts an estimated 80 million members in the United States alone, which translates to a whole bunch of customer insights. Still, Amazon is constantly on the lookout for additional methods of collecting deeper data. This would likely include payment methods. It’s plausible that Amazon would invite Whole Foods shoppers to use Amazon Pay, a digital payment system that allows shoppers to pay for purchases using their Amazon account information. This would provide a fairly unobstructed view into shopper preferences for more precise store-by-store merchandising, promotions and communications.
This might also up the percentage of Whole Foods shoppers who are also Prime members to well north of 62 percent. If so, it would further expand the insights Amazon collects, feeding the cycle of opportunity for Whole Foods, its manufacturing partners and shoppers — one apple, online order and promotion at a time.