We should all have such problems. The product managers over at that very, very successful company called Amazon are now facing a new challenge. A while back Amazon paid US$13.5B to purchase the high-end grocery store chain called Whole Foods. The Amazon product managers are now under the gun to change their product development definition and apply what they have been able to do so well for selling books and home goods to food. Just exactly how should they go about doing this?
The Power Of Prime
The Amazon product managers are not showing up to sell groceries with empty pockets. Instead, they are arriving with all of the tools and techniques that they have developed over the years in order to sell more to Amazon customers. One of the most powerful tools that they have available to them is the Amazon Prime membership. Just in case you are not aware of what an Amazon Prime membership is, Amazon will allow you to pay them $119 per year to sign up for their Prime program. Once you are a member, any products that you purchase from Amazon will be shipped to you for free. Additionally, you gain access to the Amazon Prime streaming service which contains custom content and Amazon developed TV shows.
When it comes to Whole Foods, Amazon is leveraging the power of their Prime program. The approach that the Amazon product managers appear to be taking is to let Whole Foods shoppers know that they can get discounts on Whole Foods products if they are Amazon Prime members. They are getting the word out by installing signs in Whole Foods parking lots letting arriving customers know that they are offering discounts to Prime members. Once inside the store, customers are presented with signs that indicate lower prices on specific products such as sausages and nectarines. All of these signs have been created using the same blue color that Amazon has put on their Prime shipping trucks and in their adds for the Prime service. If the Amazon product managers can get this right, then they’ll have something to add to their product manager resume.
The Amazon product managers are not simply offering in store discounts. They have also gone after the Whole Foods food delivery service. The first thing that they have done is to expand the number of cities in which Whole Foods offers two hour delivery of groceries to 14 cities. In combination with this service, more than half of the Whole Foods stores are now offering a 10% discount when Prime members order sales items. The combination of a Prime membership with home delivery has lead to an increase in home delivery sales. There has been some negative feedback from customers on this. In Whole Foods parking lots, some parking spots are now reserved for home delivery drivers. A portion of some stores has been taken over for the packaging and handling of home delivery shipments. Stores have also become more crowded with both customers and home delivery staff rushing in through the same doors.
The Power Of Cross-pollination
The Amazon product managers have to have a goal or purpose for marketing to the Whole Foods shoppers. It is believed that the Amazon product managers will be trying to use Whole Foods discounts as a way for Amazon to capture even more of the retail spending that is made by Whole Food’s customers who mainly live in urban areas. It is estimated that roughly 60% of Whole Foods customers are already Prime members.
In order to leverage the power of the purchase of Whole Foods, the Amazon product managers have started to stock the shelves in the Whole Foods stores with products that are right out of the Amazon catalog. Amazon products such as Echo speakers, fire tablets, and Fire TVs are now being offered to Whole Foods customers in store. Additionally, Whole Foods stores are also being equipped with Amazon lockers where Amazon packages can be picked up by customers who live in urban areas where it wouldn’t be safe to leave the package outside their front door.
This cross-pollination goes both ways. Online customers who are browsing Amazon’s catalog will now discover that there are Whole Foods products being displayed. Whole Foods beans and other types of Whole-Foods store-brand goods are being given prominent display locations on the Amazon web site. Likewise, the Whole Foods line of “365 Everyday Value” products are also getting a lot of viability on the Amazon Web site. Since Amazon purchased Whole Foods, sales of Whole Food’s private label products has increased. Another way that the Amazon product managers are trying to get more customers to use their Prime membership to shop at Whole Foods comes from the 5% cash back that customers get when they make purchases at Whole Foods using their Amazon Prime credit card.
What All Of This Means For You
The Amazon product managers have done a great job of helping Amazon to become a powerhouse in online sales. Their lives are about to become even more complicated now that Amazon has gone ahead and purchased the Whole Foods grocery store. The Amazon product managers are going to have to look at their product manager job description and find ways to leverage the tools that they have created to sell books to now sell groceries. The big question is if those skills are going to be reusable.
The Amazon product managers have decided to use one of their most powerful customer tools as they try to boost Whole Food sales. The Prime membership was developed to get customers to buy more goods on Amazon and the thinking is that it can be used to get people to buy more goods at Whole Foods stores. The product managers have created blue signs that have been placed in Whole Foods stores that tell people who have Prime memberships where they can get discounts. These discounts have been extended to also include discounts on the Whole Foods delivery service. The product managers want to use the Prime discounts to get the 40% of Whole Foods customers who are not Prime members to sign up for Prime. Amazon catalog products, such as Echo speakers, are now starting to become available on shelves in Whole Foods stores. Likewise, Whole Foods store-brands are now starting to show up in the Amazon online catalog.
The grocery business is fundamentally different from the business of selling books online. However, the Amazon product managers have done a great job of finding ways to get people to keep coming back to their online store and buying more. They hope to be able to take the skills that they have learned here and apply it to Whole Foods. The use of the Prime membership program is a great way to start this process. Not only will Amazon get more people to sign up for Prime, but they can potentially get more customers buying both food and books!
– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™
Question For You: Do you think that the Amazon product managers have to do more to attract non-Prime members to Whole Foods?
Click here to get automatic updates when
The Accidental Product Manager Blog is updated.
P.S.: Free subscriptions to The Accidental Product Manager Newsletter are now available. It’s your product – it’s your career. Subscribe now: Click Here!
What We’ll Be Talking About Next Time
So where do you live today? The answer for a lot of us is in an apartment. Now let’s go back and think about what it took to get you into that apartment. First, of course, you had to find the apartment. Then you had to find a way to get the stuff that you owned to the apartment. Then it had to be put into the apartment. Finally, you spent the next weeks, months, years unpacking and putting everything in the place where it belonged. Wow – what an effort that was! If only there was an easier way to go about this moving into an apartment thing…