Amazon.com Inc. is incorporating Whole Foods Market products with its Amazon Prime Now service, which offers delivery in two hours or less.
Amazon, No. 1 in the Internet Retailer 2017 Top 500, earlier this week sent a promotional email to select Prime customers, informing them that they can have select products from Whole Foods’ 365 Everyday Value brand delivered to them in two hours or less. On Amazon’s site, those products include more than 650 products ranging from beverages to bath and body products.
Prime Now is available in 32 cities and metropolitan areas but not all of those areas overlap with a Whole Foods location. Amazon and Whole Foods did not state where the Prime Now service for Whole Foods is available or how many Prime customers are eligible, and they did not return requests for comment.
Amazon announced plans to acquire Whole Foods in June for $13.7 billion, a deal which closed last month. At the time of the closing announcement, Amazon announced plans to integrate Prime membership with Whole Foods’ point-of-sale system and offer benefits to Prime members who shopped at Whole Foods. Prime is Amazon’s loyalty program which charges shoppers either a $99 annual fee or a $10.99 monthly fee and features perks such as free expedited shipping on online orders and streaming video. Prime Now is one of those perks, a free two hour delivery service that allows shoppers to get select items delivered quickly.
Analysts say they think the Amazon-Whole Foods partnership has a chance to introduce Whole Foods to a whole new audience of shoppers.
Morgan Stanley equity analyst Brian Nowak wrote in a note today that he estimates about 80% of all Amazon Prime members in the U.S., or 37 million out of 45 million households, are not Whole Foods shoppers. Prime Now, he writes, could sway some of that 80% to bring their grocery dollars to Whole Foods.
“In this case convenience will likely be the cure, as we expect Amazon to integrate the 1-2 hour Prime Now offering into Whole Foods Market,” Nowak writes. “We see Prime Now driving one-third of [Whole Foods] forward growth.”
While Amazon is delivering Whole Foods-branded products to shoppers, it hasn’t taken over all grocery delivery services for the company—yet.
Shoppers can have Whole Foods’ groceries including produce and other food delivered via delivery app Instacart. Whole Foods has never sold online directly through its own website, but it did take an ownership stake in Instacart last year. An Instacart spokeswoman did comment not on when or if the company’s arrangement with Whole Foods will change.