May 19, 2018
In this year’s letter to shareholders Amazon’s CEO, Jeff Bezos, revealed for the first time that the E-commerce juggernaut has signed up over 100 million customers for their Prime Membership program, the cost of which recently increased from $99 to $119. Among other things, the program earns members free two-day shipping on over 100 million items, plus access to streaming movies, television shows and music.
In what appears to be an ongoing quest to ensure that members never question the value proposition of Prime membership, Amazon continues to expand program benefits. Following their purchase of the grocery retailer Whole Foods in 2017, earlier this year Amazon launched a 10-city test of free two-hour delivery of Whole Foods groceries to its Prime members.
In recent days, the companies unveiled another test – this one in Florida - where beginning May 18, Prime members began saving an additional 10 percent off hundreds of Whole Foods items already on sale. Shoppers will simply have to scan the Whole Foods app during checkout. Plans call for nationwide rollout later in the year.
Certainly, the Amazon-Whole Foods combination concerns grocers. Feeling little pressure to drive profit, Amazon can afford to sustain highly competitive prices. Plus, like no other company, Amazon has potential to leverage its store and distribution network with its supply chain and E-commerce prowess. In contrast, brick-and-mortar grocery chains face the dilemma of choosing between developing their own delivery capabilities or partnering with firms with expertise in that space.
On a global basis, the ultimate retail challenge could be between Amazon and Walmart, who recently agreed to pay $16 billion for a 77% stake in India’s leading online retailer Flipkart, outbidding Amazon in the process. The appeal is Flipkart’s strong position in multiple large and growing sectors, including electronics, fashion and digital payments. Amazon, meanwhile, also has big expectations for India. The firm is committed to investing $5 billion or more in what is expected to become the world’s largest country, by population (already 1.3 billion).
This E-commerce industry news update is presented by Butcher Block Co. – a leading e-tailer of wood countertops, stainless steel kitchen equipment, kitchen accessories and furniture for kitchens and dining rooms.
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