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Here's what Amazon Prime subscribers say about shopping Amazon and Whole Foods on Prime Day (AMZN)
This is a note from Business Insider Intelligence's E-commerce coverage. Click here to learn more.
Business Insider Intelligence
Most Amazon Prime subscribers plan to shop Prime Day sales online — but not at Whole Foods. In an informal survey of Business Insider readers, Business Insider Intelligence found that 78% of respondents with Prime subscriptions plan on shopping Amazon on Prime Day, while 25% plan to shop at Whole Foods. The data isn't representative of the general population, as Business Insider readers tend to be younger, male, and tech-savvy. But we believe it suggests that Amazon’s efforts to promote Prime Day for Whole Foods will succeed in creating traffic for the grocer, though Amazon could do more to build its performance in future years.
Prime Day is likely to make Amazon record profits online, but its work with Whole Foods is still in the early stages.
A longer time frame and bigger discounts will draw record numbers of customers to Amazon. Amazon extended Prime Day to 36 hours this year, up from 30 in 2017, giving consumers more time to make purchases. Meanwhile, the company’s plans to offer 50% more Spotlight Deals, its “deepest discounts” on popular brands and products, and its introduction of Prime Day Launches, which will see brands offer exclusive and special-edition items for the event, will provide consumers with more attractive offerings. We think these efforts will be successful in making this year's Prime Day the biggest on record.
But fewer shoppers plan to act on Prime Day deals at Whole Foods. Amazon has gone to great lengths to promote Prime Day at Whole Foods, offering consumers deals including a $10 Amazon credit for subscribers who spend $10 at Whole Foods. However, only 25% of respondents say they’re likely to take advantage of Amazon's Whole Foods promotions on Prime Day. This weaker interest could be because not all Prime subscribers live near a Whole Foods store, and because it requires making a trip to a store — a larger time and effort commitment than shopping online.
Attracting Prime subscribers to Whole Foods on Prime Day is a valuable opportunity for Amazon, and the first iteration appears to be off to a good start. Fewer than 20% of Prime members are Whole Foods shoppers, a source told CNBC. But since 25% of respondents with Prime are planning on shopping with the grocer on Prime Day, the event may successfully bring new Prime subscribers to the grocer, although it's unlikely that all respondents will follow through on their plans. Adding new Whole Foods customers is a key step in improving its standing in the massive grocery industry in the US — FMI and Nielsen estimate that online and offline grocery sales totaled $641 billion in 2017. That means Whole Foods accounts for about 2.5% of the US food and grocery market. For context, top-ranked Walmart accounts for around 15% of the grocery market.
Here's how we think Amazon can draw more consumers to Whole Foods on Prime Day in the future:
Amazon should promote the grocer’s deals on Amazon.com. This year, Amazon listed the Prime Day deals available at Whole Foods in press releases and in the Whole Foods Market app. For future events, the company should list Prime Day grocery deals on Amazon.com in advance and during the event, allowing the e-tailer to build awareness of these deals among the millions of customers who are drawn to the event each year. Marketing the promotions this way could also pull in Prime members who don't usually shop at Whole Foods, and would therefore be unaware of the deals.
It should also provide bigger incentives and cross-sell from Amazon.com. Subscribers who don't shop at Whole Foods may not want to make a trip to the grocer on Prime Day because of the level of effort that requires. Amazon has already helped alleviate this issue by running many Prime Day deals from July 11 through the end of Prime Day, giving customers more time, and by offering the $10 credit for $10 spent at Whole Foods. The company should also consider offering Prime subscribers who spend $10 on Amazon.com a $10 credit for Whole Foods that can be used in the month following Prime Day. That would not only give consumers a reason to make a trip, but let them do so on their own schedule.
To learn more about Business Insider Intelligence's coverage of Amazon and the latest transformational trends, data, and insights affecting e-commerce, read the four-part Amazon Commerce Competitive Edge Report.
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