Economics Index and Qualifications
By Richard Bruce BA, MA, and PhC in Economics
Former Instructor St. John's University, New York City

One Way Amazon Can Use Whole Foods to Grow Amazon

At least some commentators have found Amazon's acquisition of Whole Foods curious. If I were running Amazon I would use Whole Foods to build my sales of exotic packaged foods that do not require refrigeration.

Whole Foods customers are educated and high income. This type of person likes to see themselves as cosmopolitan and likes exotic foods from around the world. They are also willing to pay more than what is charged for the basic middle of the road foods at the local supermarket.

So one could sell many different exotic sauces from various countries at Whole Foods. The really strong sellers would stay on the shelves as they would at any business.

The weak sellers would be replaced, but messages would be left directing people who liked them to order the sauce on line from Amazon. If many people were more likely to try something they saw at a local store than something they saw on line, I believe many, perhaps most people, would follow this pattern, then Whole Foods could encourage customers to try exotic sauces and Amazon could serve the long term customers.

Sauces strike me as an obvious product, but no doubt there are many more.

This may help to explain why Amazon would want an upscale grocery store chain. There are many reasons why Amazon might want to have local outlets. Whole Foods may serve that purpose but is especially well positioned to implement this strategy as well.

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Last updated March 27, 2017

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