Amazon said Wednesday it's testing adding mini warehouses to Whole Foods supermarkets as part of a bid to attract more shoppers to its stores and away from other grocery competitors.
The company is building a micro fulfillment center attached to a Whole Foods location in the Philadelphia suburb of Plymouth Meeting, Pennsylvania. Once the facility is operational within the next year, shoppers can order items from Amazon's website and its online grocery service, Amazon Fresh, while browsing Whole Foods and pick it up in store as they're checking out.
At a press event held near an Amazon warehouse in Nashville, Anand Varadarajan, who leads the product and technology teams for Amazon's worldwide grocery business, showed a mockup of what the completed facility will look like. A small automated warehouse would be bolted onto a Whole Foods store, where robots fetch and ferry items like socks, soda bottles or tennis rackets and place them into bags for pickup by the shopper.
The arrangement would allow shoppers to buy staple goods from brands that aren't carried at Whole Foods markets like Pepsi soda and Kellogg's cereal, and tap into Amazon's vast online catalog of items.
Amazon said it's looking to "eliminate those extra trips" made by shoppers to other grocery stores. The average American shops at two different grocery stores per week, whether to maximize their cost savings, shop from a broader range of products, or take advantage of different promotions at each store, according to an April study from market research firm Drive Research.
"Customers shopping at Whole Foods Market today are looking for natural and organic products," Varadarajan said during a presentation on Wednesday. "However, our data shows that many of them also visit additional stores to complete their regular grocery shopping needs. With our micro fulfillment center, we can reduce the need for our customers to visit different stores or make multiple online orders."
Amazon has for years angled to gobble up a bigger share of the grocery market. It's a category where Americans frequently spend money, more than other verticals like clothes or electronics. But Amazon also faces stiff competition from entrenched players like Walmart, Kroger and Albertsons, along with regional grocers.
In 2017, it spent $13.7 billion to acquire Whole Foods, a price tag more than 10 times higher than Amazon had paid in any prior deal. It's also launched a growing stable of grocery offerings, including a grocery delivery service and its own supermarket chain, Amazon Fresh, aimed at the mass market.
Amazon CEO Andy Jassy has also said the company has a growing business selling "everyday essentials" like paper towels, dish soap and other items.
