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Editor's Notebook

The Amazon Threat: Why Whole Foods Could be Bad for You

Around the same time that last month’s issue was hitting mailboxes, internet behemoth Amazon closed the deal to acquire Whole Foods Market. The timing of all of this is ironic.

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Around the same time that last month’s issue was hitting mailboxes, internet behemoth Amazon closed the deal to acquire Whole Foods Market.

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The timing of all of this is ironic. If you flip open to page 40 of the August 2017 Sourcebook edition, you’ll find that “Internet Sales” (namely Amazon) was ranked as the No.1 toughest competitor for tire dealers, up from the sixth position just a year prior.

The acquisition of Whole Foods Market by Amazon makes this threat even more ominous.

Whole Foods Market started in Austin back in 1978 when four guys got together to bring organic and natural foods into a complete grocery experience. Ten years later, they were the largest natural food chain in the United States.

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Flash forward to June 2017 – the company inked an agreement with Amazon to acquire the retail chain and its 470 locations for $13.7 billion cash. The acquisition officially closed on Aug. 28.

Overall, the deal is a win for both companies.

With increased accessibility to non-GMO, natural and organic foods from the likes of ALDI, Walmart and other less-expensive grocery chains, Whole Foods Market has been struggling to maintain its customer base. For them, the acquisition provides deep pockets and a partner for digital innovation. For Amazon, it provides a solid foray into brick-and-mortar retail through a well-respected partner brand, plus it solves many challenges for them within the grocery category.

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So why does this matter to tire dealers?  For starters, the acquisition of Whole Foods provides Amazon with hundreds of brick-and-mortar locations across the U.S. where they can showcase products and ready packages for pickup or for home delivery – including tires.

An even greater threat is what Amazon will gain from Whole Foods regarding lessons in transactional culture.

For buying stuff online, Amazon is hands-down the best at innovating the e-commerce experience. Between the ease of one-click purchasing and Amazon Prime memberships that offer exclusive savings and perks (like free two-day shipping), Amazon is hard to beat when it comes to online retail. The Whole Foods acquisition, planned innovations and lessons in brick-and-mortar performance could eventually make them hard to beat in-store as well. And let’s not dismiss the data they’re collecting on consumer buying behaviors and preferences across an increasing number of interactions, which they can then apply to future innovation.

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Of course, I’ve heard tire dealers console themselves when it comes to Amazon, claiming that it’s the level of personal interaction and expertise that will help protect their tire business from such threats.

But all of that could soon change, with this merger as a catalyst.

It’s important to note that shopping at a Whole Foods is not always about the food – it’s about the experience. It’s also not about the product – it’s about the people who support it.

Prior to the acquisition, this white-glove retail experience (more like unbleached hemp gloves hand-woven by villagers in Guatemala) often came at a higher price. But Amazon plans to change all of that. For starters, Amazon announced that they will be lowering prices on many popular staples products at Whole Foods Market locations – things like eggs, bananas, organic baby kale, organic salmon and so on. They also plan to expand.

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You need to take a lesson from Whole Foods and their approach to retail. The business is legendary for empowering employees at every level to go above and beyond in service to the customer. Something as small as shopping for a piece of chocolate can quickly evolve into an enthusiastic exchange with Whole Foods staff regarding where specific cocoa beans are sourced, why the sugar-to-fat ratio can make such a difference to taste, and the fact that chocolate liqueur is not a cocktail.

Yes, they are committed to selling quality products (just like you), but it doesn’t stop there. They also are adamant about delighting each customer, which is possible because they trust in the intelligence and work ethic of each team member to perform at his or her highest potential. In other words, they openly support employee excellence and happiness, which translates into an unforgettable retail experience for consumers.

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If Amazon chooses to embrace and expand the Whole Foods approach to additional categories of brick-and-mortar retail like tires, dealers may have some challenges ahead.

The good news is that you still have time. I doubt Goodyear’s new soy-based tires will find their way into the organic aisle anytime soon. But considering the threat that Amazon could bring to your business in the not-so-distant future, now is the time to innovate and improve your approach to a better tire-buying experience.

If you don’t do it, Amazon eventually will.

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