Amazon said yesterday that it will begin prioritizing existing online grocery customers, creating a waiting list for anyone who has not previously bought groceries from its site.
According to Reuters, "Amazon said its online grocery order capacity has increased by more than 60% during the outbreak. Some netizens who said they used Amazon Prime, its $119-a-year subscription service for U.S. shoppers, have nevertheless complained on social media about the scarcity of delivery windows … Amazon said it would have to relegate all new online grocery customers to a wait list starting Monday while working on adding capacity each week.
"In recent weeks, it increased the number of Whole Foods stores offering grocery pickup to more than 150 locations, up from 80 previously."
Amazon says it is in the process of creating "a new feature that will help customers secure a virtual 'place in line' to distribute the delivery windows on a first come, first served basis."
Amazon also plans to reduce shopping hours at its 487 Whole Food stores, the story says, so that it is easier and faster for employees to fulfill online orders.
Reuters writes that "the moves illustrates how the world’s largest online retailer, which showed its ambition to enter the grocery industry by acquiring Whole Foods for $13.7 billion in August 2017, is now leveraging its presence both online and in physical stores to handle high demand from consumers who are stuck eating at home, with many restaurant dining rooms closed to the public."
- KC's View:
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As Tom Furphy pointed out in last week's Innovation Conversation, we've been propelled several years forward in terms of e-grocery development by the pandemic; it is a kind of rip in the space-time continuum from which it will be impossible to return to the way things used to be. What Amazon - which was far better prepared for that leap than almost anyone else, and still found itself stressed by circumstances - is doing is learning from the experience, adapting to the new reality.
It makes sense for Amazon to prioritize existing customers over new customers. It also would make sense for Amazon to prioritize Prime members over non-Prime members. What would happen if Amazon decided to create two different lines to get into its Whole Foods stores - one for Prime members, who get in first, and one for non-Prime members, who have to wait? It might create riots, but it would a) send a very specific message to Prime members about the value of the program, and b) send a very specific you-better-join-now message to those not yet members.
In some ways, that's sort of what Amazon is doing by reducing shopping hours for civilians at Whole Foods stores so that employees shopping for online customers can be more efficient and effective, especially when you add that to the new existing-customers-first policy.
When you look beyond the pandemic, one wonders how these new strategies will play out in the future, both at Whole Foods and at the new chain of grocery stores it is prepping. Especially at the latter, it seems at least possible that they could offer some unique balance of online and physical shopping, with preference offered to past customers and Prime members. (I've argued for some time that it would be interesting to have these new stores only open to Prime members.)
If we accept Tom Furphy's premise that we fast-forwarded in terms of e-grocery development - and I totally do - then after the pandemic the percentage of online grocery business will be a lot higher than it was just a few months ago, and it will make sense for Amazon to architect a new vision of how grocery shopping is done.
This new vision won't appeal to everyone, and won't be appropriate for everyone. But if Amazon can do it at the high end with Whole Foods, and also in a new, value-oriented chain, it certainly will give it access to a lot of business and will make it an even more differentiated competitor.
And all because it learned from the crisis.
