Amazon slashes prices at Whole Foods on first day of merger, more changes to come

Media reports around the country reported yesterday that on the day Whole Foods merged with Amazon, prices were slashed on several items at stores around the country. Orange signs throughout the stores with Whole Foods and Amazon logos promised "more to come..."

Price reductions - some as high as 43% - were found on items like tomatoes, organic Fuji apples, avocados, bananas, Atlantic salmon, tilapia, and grass-fed ground beef. Amazon Echo and Echo Dot devices were on sale at a New York City store for $99, down from $179.

Conventional grocery stores have historically enjoyed a significant price advantage over Whole Foods, due in part to advantages in scale, logistics and category management, all of which are issues Amazon plans to help Whole Foods address.

Last week Amazon said it would embark on a plan to have Amazon Prime take over the Whole Foods loyalty program and eventually provide "special savings and in-store benefits" for Prime shoppers. The company also plans to install lockers at select Whole Foods stores to allow for delivery of online orders.

And yesterday, many of Whole Foods' private label products - including 365 Everyday Value, Whole Paws and Whole Catch - were available for online ordering and delivery through the Amazon's various channels.

FreshDirect leads grocery delivery race in sales, Peapod wins per basket

A report released by 1010data compared the performances of grocery delivery companies FreshDirect, Peapod, Amazon Fresh and Instacart through the first 10 months of 2016. The report's findings included the following:

• FreshDirect leads in sales, and has more than twice the share of Peapod, the next largest company in the study.
• Instacart and Amazon Fresh are growing at a much faster pace than FreshDirect and Peapod. Year-over-year growth for each company is 72% (Instacart), 43% (Amazon Fresh), and 7% (FreshDirect and Peapod).
• Peapod shoppers spent the most per basket ($147 per trip) compared to FreshDirect ($105), Instacart ($98) and Amazon Fresh ($84). 1010data believes this is in part due to Peapod's lower delivery fees for orders above $100.
• Shoppers order more frequently from Amazon Fresh and FreshDirect (once every two weeks) than they do from Instacart (once every 20 days).

So, you decide who's winning!

Amazon may be planning to open 2,000 grocery stores

A Business Insider report earlier this week suggested that Amazon envisions having 20 bricks-and-mortar grocery stores open by the end of 2018, and as many as 2,000 in another 10 years. The report said the information was gathered from internal memos sent between 2014 and 2016. Amazon has not commented publicly.

According to Business Insider, locations for the 20 stores would include New York, Miami and Las Vegas, and would serve as tests. A rollout of as many as 200 stores per year could follow, pending the test results.

Supermarket News pointed out yesterday that Amazon's entry into bricks-and-mortar food retail would suggest that the future of grocery shopping includes a combination of virtual and physical options.

Amazon Fresh, the company's virtual shopping option, expanded this week in the Dallas and Chicago markets.

Amazon planning to sell groceries at its own convenience stores

A Wall Street Journal story last week outlined Amazon's plans to expand its grocery business with new, bricks-and-mortar convenience stores. According to the story, Amazon envisions having stores that would sell milk, produce, meats and other perishable items that customers could take home. And using mobile phones, customers could order products like cereal and peanut butter for same-day delivery.

In addition, Amazon will reportedly open drive-in locations where online grocery orders will be brought to customers' vehicles. License-plate reading technology - currently under development - could speed customer wait times.

The stores are initially slated for subscribers to Amazon's Fresh service, which promises same-day food delivery at set times.

Although online grocery purchases only account for two percent of U.S. grocery sales, Morgan Stanley Research estimates that online sales could more than double this year. And Amazon may consider grocery sales as crucial to their growth, since consumers typically restock their refrigerators on a weekly basis, and grocery purchases could lead to other, more profitable purchases.

Amazon expects stiff competition for curbside pickup from Walmart, which plans to have the service at about one fourth of its 4,600 U.S. stores by the end of 2017. Walmart recently purchased e-commerce company Jet.com for $3.3 billion.