Dive Brief:

• Amazon has rolled out a suite of Whole Foods promotions timed to Prime Day, including discounts on seasonal products and a credit that ties the grocer to Amazon’s main e-commerce site. Whole Foods customers who spend $10 starting today will receive a $10 credit to use on Prime Day, which lasts a day and a half, beginning July 16. 
• From today through July 17, Whole Foods will offer deep discounts on a range of fresh items and grocery products. This includes a buy-one-get-one deal on Honey Nut Cheerios and bags of Allegro coffee, and $6-per-pound off on Icelandic cod filets. Additionally, Amazon Prime Rewards Visa card members with an eligible Prime membership can get 10% back on up to $400 in purchases when shopping at Whole Foods from July 14 to 17, and Prime members new to grocery delivery via Prime Now can receive $10 off their order when they shop before July 17.
• This promotion complements other tie-ins between the two companies since Amazon acquired Whole Foods in August 2017, including discounts for Prime members at Whole Foods locations nationwide earlier this summer. 

Dive Insight:

This marks the first Prime Day that Amazon has owned Whole Foods, so it will be interesting to see if the company’s massive sales rate from years past can translate to grocery. The two companies are pulling out all the stops – incentivizing delivery purchases, discounting Alexa-enabled products in-store, offering up to 40% off of seasonal food items and more. They’re also offering nearly a week lead time for customers to take advantage of these promotions. 

The bar is set very high: Last year’s Prime Day was the biggest sales day in Amazon’s history, with purchases up more than 50% from 2016. But motivating people to buy more Icelandic cod fillets could prove more challenging than deep discounts on electronics, home appliances and other gadgets. Amazon is expected to see a 40% growth from Prime Day this year, according to Coresight Research. How much of that will come from Whole Foods’ promotions is anyone’s guess, but Amazon is wise to tie the grocer into its signature event. 

According to Forbes, there are 100 million Prime members, but only 20% of them shop at Whole Foods. This proves the runway is long for Amazon in the $800 billion grocery space, but will those opportunities come through brick-and-mortar deals or through the fast-growing online grocery business, where Amazon has key advantages?

Whole Foods wants to see Prime members snapping up organic strawberries, bags of coffee and bottles of sparkling water. The real barometer of success, though, will be the grocer's ability to spur more Prime signups. The various promotions — and particularly the various $10-off discounts — are enticing, but will they be enough to motivate shoppers to plunk down $119 dollars for a membership? Either way, Whole Foods stores will have Prime signup tables ready and waiting.  

There's also an issue of clarity. Amazon is pushing its Whole Foods promotions while simultaneously offering Pantry promotions for non-perishables such as Honey Nut Cheerios, raising the question of whether separate promotions could potentially cause confusion about Amazon's grocery presence. Paco Underhill, founder of behavioral-research firm Envirosell, told Bloomberg that Amazon wants to train people to shop differently, but is offering different promotions for different Amazon channels the way to do so? Or do customers just want to get their groceries – from fresh produce to cereal to toilet paper – simply and conveniently from one channel? 

Prime day is expected to be another wild success for Amazon and Amazon Prime alike. By incorporating Whole Foods-specific promotions, this event will likely put pressure on grocers to discount during this brief window to avoid an exodus. According to a survey by Phononic, 35% of retailers are planning discount promotions timed to coincide with Prime Day. With Whole Foods in the Prime Day lineup for the first time this year, those discounts will more than likely include supermarkets big and small in an effort to compete with the Amazon juggernaut.