How Many New Customers Will Amazon Gain From Whole Foods Acquisition?
The two companies have some serious customer overlap. But Prime members spend more at Whole Foods than other shoppers — and additionally, Whole Foods has some untapped customers for the e-commerce giant.
Amazon acquired Whole Foods for $13.7 billion last month in a move aimed at solving Amazon’s grocery ambitions as well as addressing Whole Foods’ lagging tech — but how many new customers are Amazon and Whole Foods actually set to gain from the acquisition, respectively?
According to research from 1010data, the move is set to benefit both companies from a consumer spend perspective beyond just the delivery and technology benefits that the acquisition conferred: The 19 percent of Whole Foods customers who don’t shop at Amazon creates an estimated five percent increase in net new customers for Amazon right off the bat.
Prime Members Spend More
“In examining customers who shopped more than once at Whole Foods from June 2016 – May 2017, we found that 81 percent of Whole Foods shoppers are already customers of Amazon,” 101data’s report states. “On the flip side, 29 percent of Amazon’s customers also shop at Whole Foods. The 19 percent of Whole Foods customers who don’t shop at Amazon creates a five percent increase in net new customers for Amazon after the acquisition. On top of that, of all Whole Foods shoppers, 52 percent are Prime members — meaning half of Whole Foods’ customers are already regarded as key Amazon shoppers.”
Additionally, Prime members tend to spend more at Whole Foods, according to the report — so as Amazon continues to acquire more Prime subscribers, it should be a spending boon to both entities, which is another factor that may have influenced Amazon’s acquisition decision.
And as far as Amazon’s professed grocery delivery ambitions? Whole Foods shoppers reportedly have a higher propensity for online grocery shopping, with 10 percent of Whole Foods customers having used an online grocery delivery service in the past 12 months; for comparison, only 5-6 percent of Albertson’s and Kroger’s customers bought groceries online in the same period, which “makes Whole Foods shoppers desirable for a company like Amazon that’s trying to expand their grocery delivery footprint,” the report concludes.
It will take time to for the full benefits of the acquisition to materialize: How (and how soon) will Whole Foods’ traffic — both in terms of its physical stores and its online delivery orders — increase under Amazon’s ownership? But in the meantime, it’s clear that both Amazon and Whole Foods are set to experience initial growth from the new consumer base outside of their current overlap — and that, as Aisle411 CEO Nathan Pettyjohn put it at the time of the acquisition, “with physical store purchases still accounting for nearly 90 percent of all retail transactions even after a decade of e-commerce growth, Amazon realizes that continuing large-scale growth over the next 10 years as a company will require capturing a big slice of the physical store purchasing market — so as long as Amazon can make do with higher margins and less overhead than traditional retail stores.”