Amazon Combines Fulfillment Networks to Better Compete in Grocery Business

Amazon is reportedly combining the fulfillment networks of its Whole Foods Market and Amazon Fresh stores to better compete in the grocery business.

By doing so, the firm plans to offer customers a one-stop shopping experience, the Wall Street Journal (WSJ) reported Friday (Nov. 8).

The company has started using 26 of its Amazon Fresh fulfillment centers to handle delivery orders for Whole Foods products and household goods, and plans to expand that service to more locations soon, according to the report. It also started using one same-day fulfillment site to deliver groceries.

The grocery sector is a category in which Amazon has traditionally lagged behind Walmart, PYMNTS reported Friday. Walmart’s infrastructure and cost-effective delivery options give it a dominant position in the grocery space, while Amazon continues to build its offerings in a bid to close the gap.

As of the second quarter, Walmart captured a 20% share of consumer grocery spending, while Amazon held 2.7%, according to the PYMNTS Intelligence report, “Whole Paycheck Report: Walmart Holds Grocery Lead Over Amazon Despite Overall Share Declines.”

In October, Amazon opened a new type of store called Amazon Grocery within the same Chicago building that houses a Whole Foods Market, saying the 3,800-square-foot small-format store is designed to offer customers a simpler way to grab “grocery top-ups” like coffee and grab-and-go meals during their regular Whole Foods visit.

“With this new concept, customers can shop their favorite natural and organic products at Whole Foods Market and get a broader product assortment from Amazon all in one trip, saving them time and money,” Jessica Martin, a spokesperson for Amazon, told PYMNTS at the time.

Also in October, the company announced it was developing its first automated micro fulfillment center at a Whole Foods store outside Philadelphia.

“As they browse the aisles for their favorite Whole Foods Market products, they can also easily place an order for Tide Pods and Pepsi from the Amazon app on their phone,” Tony Hoggett, who was senior vice president of Worldwide Grocery Stores at Amazon at the time, said. “These additional items will be prepared in the back-of-house while the customer finishes up shopping and will be ready to go when they check out — all within minutes after placing the order.”