Amazon’s acquisition of Whole Foods was met with wariness and a not-so-unexpected round of hostility from rival supermarket chains. There was little doubt that the company’s foray into grocery retail would have made a big impact on the industry. What’s surprising, is how the buyout is also opening doors for suppliers and grocery-delivery startups like Instacart and Shipt.
It didn’t take long for Amazon’s $13.7 billion deal with Whole Foods to disrupt the grocery retail industry. The first and most obvious impact was the pressure that supermarkets like Kroger felt when Amazon began lowering prices at Whole Foods. However, after having its shares rattled by Amazon, Kroger was able to regain investor confidence by partnering with Instacart and several other grocery delivery services, allowing it to outpace Amazon over the past three months.
With the $13.7 billion purchase of Whole Foods, Amazon disrupted groceries, retail delivery, and even the enterprise IT market https://t.co/MKi9MdO93V pic.twitter.com/GjoGE2hf2D
— Business Insider (@businessinsider) December 18, 2017
Corporations like Target and Walmart also hurried to hammer out deals of their own. In fact, Target announced on Wednesday, that it would acquire Shipt for $550 million. The delivery startup already saw a 60% upsurge in orders since Amazon’s Whole Foods takeover in June. It’s now expanding its reach from 30 U.S. markets since 2016 to 70 before year’s end.
Instacart, a company that had described itself as the American grocer’s ally against Amazon, admittedly had a challenging time pushing its service before Whole Foods was purchased. But according to Instacart CEO Apoorva Mehta, that all changed after Amazon’s acquisition, as retailers started calling them insisting that they launch in as many stores as possible. Now they have 165 retailers, a far cry from last year’s 30.
How Amazon’s Whole Foods purchase helped Instacart https://t.co/5zSq6pEIkY pic.twitter.com/2orXc5Afm7
— Business Insider (@businessinsider) December 19, 2017
Independent retailers are also seeing an upside to the Whole Foods deal. The rising interest in local food and the fears local producers have over losing their market to Amazon could force small and independent retailers to develop systems that allow for a mix of different products.
The Good Food Merchants Collaborative, a group of around 22 independent groceries, is planning to roll out a cooperative buying system that will offer competitive prices for consumers and help expand the buying power of small retailers. To that end, these small grocers are hoping to tap into local food producers, since they have stronger ties to the community and consumers. It’s an interesting gamble, and one that could have a big payoff. Research has shown that consumers are also looking to independent grocers for local food.
[Featured image via Whole Foods Market]