Can Amazon make a tech hub out of Whole Foods?
In late August, Whole Foods started selling Echos as soon as it completed its sale to the e-commerce giant. It may seem like an odd item to stock at a grocery store, but there's a solid strategy behind it.
“They’re going to try to sell them or give them away at any place they can,” said James Dion, president of Dionco Inc., a retail consulting firm in Chicago. “It’s the old give away the razor and sell the razor blades.”
It's not unheard of for grocery stores to sell electronics and seasonal nonfood items (like sunscreen and garden gnomes), so there may be a logic to treating a grocery store like an electronics store for a limited number of items.
What Amazon is doing differently is being more targeted. Amazon already has a growing business for selling fresh foods, testing models such as AmazonFresh Pickup stores in Seattle and the Amazon Dash Wand for Alexa-assisted bar code scanning in the kitchen. “Amazon is out to own the world,” Dion said.
Since the Whole Foods acquisition, Alexa enthusiasts can now order food and pick it up at a nearby Whole Foods store (Alexa already knows the postal code), or simply have it delivered.
With voice-activated shopping, Amazon may be trying to get ahead of the competition. And it has been known to buy out innovations that make processes more efficient.
For example, in 2012 it acquired the independent robotics manufacturer Kiva Robotics after Amazon realized it had a more efficient warehouse tool.
The Echo also serves as a diversion from any of Amazon's bigger ambitions, according to David Livingston, an analyst with DJL, a supermarket research firm.
“They’re distracting the competition to invest in new things. That may be a waste of time,” he said.
Drones, for example, drew a lot of attention when Amazon first began discussing using the unmanned aircraft for package delivery. This scared the competition and prompted rampant investment in the technology, but drones didn’t catch on as much as people expected, he said.
“They scare the crap out of their competition thinking they know something that they don’t,” Livingston said.
The Echo is hardly a new addition to Amazon's lineup, but it's one of Amazon's most successful and recognizable. It may not be cheap, but it is something Amazon devotees may consider an impulse purchase.
Madelyn Skeen, a junior at the University of Georgia, got the smaller and cheaper Echo Dot as a gift.
“I think eventually I probably would have ended up with one, but when they first came out, I was like, would I really use that?” she said. “But when I got one as a gift, I was like, now I don’t have to get one for myself.”
She doesn’t see herself using it for voice-activated shopping, though. As a busy management student, Skeen finds relaxation through grocery shopping, giving her a break from her studies.
Melinda Roseman, a Georgia resident, received an Echo as a gift about six weeks ago and she went on to buy two Echo Dots to expand the range in her new smart home. She uses the Echos daily and can control the lights, the A/C and music throughout her home.
“I use it to the extent that when I get into my car, it’s almost an impulse to say, 'Alexa can you turn on Amazon Prime?' " she said.