Joining with a Giant: How Amazon's Acquisition of Whole Foods Will Impact consumers

[Whole Foods and Amazon]. (n.d.). Retrieved from https://slickdeals.net/blog/
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          On June 16, 2017, internet giant Amazon announced that it would acquire organic grocery store Whole Foods for $13.7 billion (Turner, Wang, & Soper, 2017). Although somewhat surprising, many consumers, myself included, saw this as a natural extension of a rapidly growing company. Although originally an online shopping platform for books, movies, and CD’s, Amazon’s reach has since stretched into everything from food and clothing to music streaming and the production of its own television shows and movies. Amazon’s multi-channel marketing and wide range of products often allows them to lower prices while still making a profit, as they will at Whole Foods (Levy, 2017). Consumers who are primarily concerned with economic value will certainly appreciate this change (Babin & Harris, 2016, p. 29).

[Avocados at Whole Foods]. (n.d.). Retrieved from 

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However, the most interesting part about Amazon’s acquisition of Whole Foods is the fact that an exclusively online retailer has now merged with a retailer that primarily operates in-store. This will inevitably change the consumer experience for both Amazon and Whole Foods customers.

            First, after lowering the prices of many key items within Whole Foods stores, Amazon placed visible markers to highlight the fact that the prices had been lowered specifically because of the merger. For customers who were somehow unaware of Amazon or the merger, this alters their perception by immediately connecting the presence of Amazon with something positive: cost-savings (Babin & Harris, 2016, p. 53). Even if this connection is made through subliminal processing, Amazon is still exposing the customer to this connection (Babin & Harris, 2016, p. 54). 

            The second most visible part of the acquisition are Amazon lockers. Consumers can purchase items on Amazon, which are then shipped to their nearest Whole Foods store and placed in a locker for the consumer to pick up the item. In this way, Amazon is using its new physical spaces to increase flexibility in how a consumer receives his or her Amazon goods. Although it may seem more convenient to receive a package in the mail, some consumers are concerned with their privacy or are unable to be present to sign when a package is delivered. By giving their consumers more options through the lockers, Amazon can increase customer satisfaction by tailoring the shopping experience to individual customers’ needs. (Babin & Harris, 2016, p. 292). 

Meldner, R. (2017, August 29). Amazon Lockers at Whole Foods Market
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            The lockers serve an additional purpose to allowing Amazon customers to pick up their Amazon items. If an Amazon customer who chooses to use the locker service has never visited a Whole Foods, then Amazon is introducing the customer to the store. This is a critical new marketing tactic employed by Whole Foods, and gives the grocery store access to many new customers (Babin & Harris, 2016, p. 31). For customers who are familiar with Whole Foods but may not have otherwise visited the store on that day, they may remember or create a need to purchase an item while in the store for their locker pick-up. In either case, Whole Foods has created a remarkable opportunity for unplanned shopping (Babin & Harris, 2016, p. 236).

            Beyond the lowered prices and convenient shopping opportunities, Amazon can use its acquisition of Whole Foods to learn much more about its customers. Before the acquisition, both Amazon and Whole Foods used big data to analyze its customers, gathering information through internet browsing, loyalty programs, and credit card purchases (Babin & Harris, 2016, p. 21). However, by combining the companies’ data bases, Amazon can create a much fuller picture of each consumers’ habits. The clearer idea of each customer will allow Amazon to produce stronger predictive analytics and therefore improve their marketing tactics (Babin & Harris, 2016, p. 21). If Amazon can continue to utilize Whole Foods to better position and price its goods and consumer experience, you and I will gain the most from this massive merger.  

The Magic of Little Marketing

Trader Joe’s, a Southern California based grocery store, has swept the nation with little to no marketing of their own! This is a wonderful opportunity to understand how social media and the brand community have impacted the business’s growth (Babin & Harris, 2016, pp. 158-164).

            Trader Joe’s opened in 1967 in Pasadena, California ("Our Story," n.d.). Trader Joe’s has since expanded to over 474 across 41 states ("Trader Joe's," n.d.). They use a unique private branding model, purchasing directly from manufacturers and using their own unique labels. Trader Joe’s has also become popular for great deals on wine, by purchasing overstock.

            However, it is not the low prices or private branding that separates Trader Joe’s from its competition. Trader Joe’s’s incredibly unique selection of products creates remarkable buzz. This has created a community of Trader Joe’s shoppers that share ideas and experiences, saving Trader Joe’s serious time and money.

            First, let’s explore Trader Joe’s’s extremely limited company-driven marketing. Excluding a few radio ads, Trader Joe’s’s primarily advertises out of store through their newsletter, The Fearless

[Fearless Flyer]. (2010, June 2). Retrieved from https://www.zendesk.com/blog/
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Flyer, eight times per year ("General Information," n.d.). The Fearless Flyer combines exclusivity and elusiveness. A consumer can subscribe to the newsletter through the store’s website, which allows them to actively become part of an informal group of subscribers, and gives them expert power through knowledge of new products (Babin & Harris, 2016, pp. 158-161). However, I have received The Fearless Flyer without ever actively subscribing to the newsletter. It is possible that Trader Joe’s is an example of the resource-advantage theory, and is using my credit card information to find my address and send me a flyer (Babin & Harris, 2016, pp. 11). However, it is also possible that Trader Joe’s sends the newsletter to every address within a certain radius of their store. By sending the newsletter to those who have not actively subscribed, Trader Joe’s creates an interesting consumer dilemma. They either increase the sense of exclusivity by suggesting the consumer has been selected to receive the newsletter, or reduce the sense of exclusivity by sending the newsletter based on location. In addition to the Fearless Flyer, Trader Joe’s does utilize in-store marketing for new products.

            It is obvious that despite Trader Joe’s’s limited self-driven marketing, their growth has not suffered. Much of this can be attributed to the incredible social media presence created by Trader Joe’s brand community (Babin & Harris, 2016, pp. 158-164). For a company as large and well-known as Trader Joe’s, it is shocking to discover that they have only recently expanded beyond an unsophisticated, somewhat outdated website. However, according to Millennial Marketing, Trader Joe’s is one of the leading brands among millennial shoppers: a generation who heavily relies on online marketing to make consumer decisions (Golen, n.d.). The fact is, Trader Joe’s loyal brand community has taken word of mouth to the web, and created a consistent marketing platform for the grocer. For example, thousands of Trader Joe’s fans have created and joined dozens of Trader Joe’s related Facebook groups. While some share basic information about new products, others serve niche customers like, “Kosher Trader Joe’s” and “Bring Trader Joe’s to City X.” On Instagram, Trader Joe’s does have an official presence. However, the unofficial account, @traderjoeslist, has generated more than triple the following of the official account! This is a great example of how on social media, Trader Joe’s’s consumers are more familiar connecting among themselves than with the actual company. Finally, while Trader Joe’s does not have an official company presence on Twitter, consumers such as @traderjoeslist and @cookingwithTJ do, and have garnered thousands of followers.

            Unfortunately for many other retailers and grocers, Trader Joe’s hands-off marketing success is an anomaly. In his Forbes article, Glen Llopis has some ideas why this is the case. It is unlikely that another company would experience similar results by abandoning company driven marketing efforts. However, there may be an opportunity for companies to foster a larger brand community within their own consumers. Are you part of a brand community? How are you contributing to that brand’s marketing success? By learning our roles in the consumer landscape, we can make informed, value-expressive decisions about our behavior (Babin & Harris, 2016, pp. 131).

            Next time I will be exploring how Amazon’s acquisition of Whole Foods has influenced both company’s consumers’ behavior!