Amazon's decision to offer Whole Foods discounts to its Prime members isn't just a gimmick. In fact, there's sound economic, business and psychological principles behind the move:
Tying Prime membership to grocery buying habits plays squarely into Amazon's strategy of selling all things to all people. While likely boosting Prime's membership rolls, it could also induce a broader range of customers to stop more often at Whole Foods — a company that has a reputation for being too pricey for many shoppers.
“Part of what Amazon is trying to do is translate that higher frequency traffic to Whole Foods,” said Mike Levin, co-founder of Consumer Intelligence Research Partners LLC. “Ties between Prime membership and Whole Foods will make those stores a more standard destination for these shoppers.”
Every supermarket and drugstore hands out loyalty cards or asks customers to sign up and shop more. Mostly customers ignore these when deciding where to buy. Not Prime customers.
“Prime customers are very suggestable and leadable, extremely loyal and spend a lot more at Amazon than others,” Levin said. About 63 percent of Amazon customers in the U.S. have Prime and they spend $1,300 a year on goods from the retailer, compared with $700 for non-members, CIRP estimates. They purchase from Amazon 25 times a year on average, 11 more visits than non-Prime customers.
Do you shop at Whole Foods? Are you an Amazon Prime member? Will this encourage you to shop at Whole Foods or join Amazon Prime? Share your thoughts in the comment section below!
Source: Bloomberg
https://www.bloomberg.com/news/articles/2017-08-25/amazon-primes-whole-foods-for-more-visitors
Healthy food should be affordable. Glad Amazon came in to make changes.