In 2017, Amazon bought Whole Foods for nearly $14 billion in anticipation of turning shoppers into Prime members, along with gaining entry into the $860 billion U.S. grocery industry.
Now the e-commerce giant is struggling to convince its Prime members to shop at Whole Foods, even after offering an extra discount on sale items exclusively for Prime shoppers along with splashy discounts on items like salmon and avocados.
But despite these steps, only 18% of Prime members shop at Whole Foods and 70% Prime members never step into a Whole Foods.
The major reason for this is Whole Foods’ high prices, as cheap natural foods have now gone mainstream and are available at much lower price at rival supermarkets.
Taking the cue from Whole Foods, other grocers like Kroger (KR), Albertsons and Aldi have also expanded their organic aisle but when it comes to price they are generally cheaper than Whole Foods. Kroger's Simple Truth grew 15% last year and is now a $2.3 billion brand. While Aldi, which already has more than 1,800 stores across U.S., plans to expand its fresh food selection by 40%.
Prices of Whole Foods are also ticking back up as analysts report that Whole Foods raised prices from 10 cents to several dollars on hundreds of products and price of a basket of 60 items have gone up 15% than traditional grocery stores in March.
As such, Amazon is likely to lower prices again on hundreds of items at Whole Foods and will double the number of weekly deals for Prime members. Mostly focused on produce, the cuts will be effective starting Wednesday.