Amazon puts new online grocery customers on hold, reconfigures Whole Foods

Discussion
Photo: Nick Lake/Amazon
Apr 14, 2020

The surge of online grocery adoption due to the coronavirus pandemic has led to slowdowns and stock-outs from the once untouchable Amazon.com. Now the e-tail juggernaut is taking unprecedented steps to play catch up with the massive demand.

Amazon began placing new grocery delivery customers on a wait-list yesterday, according to CNBC. The move comes as existing Amazon grocery shoppers have been increasingly unable to find delivery slots and therefore unable to place orders. Amazon is also reconfiguring Whole Foods’ role in the delivery process. After boosting the number of locations with available grocery pickup from 80 to 150 due to increased demand, Amazon has decided to shorten hours that Whole Foods is open to the public in order to focus on online order fulfillment.

At least one Whole Foods location has been closed entirely for foot traffic and is being used solely for online order fulfillment. The chain sent out an email on April 13 informing customers who frequent the Bryant Park Whole Foods location in Manhattan that the store would be temporarily closed to focus on online orders. The message directs customers interested in in-store shopping to visit the Union Square, Columbus Circle or Midtown East stores. It also suggests that customers can place orders online through Amazon, although it notes that delivery slots may be unavailable due to demand.

The coronavirus-inspired rise in e-grocery demand has been driven in no small part by new customers. A full 28 percent of online grocery shoppers made their first purchase in March, according to a study by Acosta.

The inability to meet skyrocketing customer demand is only one of the problems Amazon has been facing as a result of the coronavirus pandemic. It has also received criticism from some quarters for failing to take appropriate steps to ensure the safety of its warehouse staff.

Amazon is not the only target of such charges. Anxiety and alarm have grown throughout the U.S. grocery world as news emerges of frontline store staff becoming infected with — and even dying from — COVID-19 at stores run by Giant, Trader Joe’s and Walmart.

DISCUSSION QUESTIONS: Will wait-listing new customers and converting Whole Foods locations to online fulfillment centers allow Amazon to get on top of its e-grocery demands? What do you think the online grocery shopping landscape will look like when the dust settles?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"[This represents] a classic advance and secure strategy. It recognizes that advances into these uncharted territories require a planned effort to secure the ground taken."
"Even before “the dust settles” brands are smart to focus on existing customers even at the expense of prospective ones, if they have such constraints."
"I know we are in a time of crisis and everyone is doing the best they can, but Amazon continues to stub their toe with their customers."

Join the Discussion!

37 Comments on "Amazon puts new online grocery customers on hold, reconfigures Whole Foods"


Sort by:   newest | oldest | most voted
Michael La Kier
BrainTrust

The pandemic has shown significant cracks in the system. Even the world’s largest and most successful online retailer can’t keep up with the shift in demand driven by the COVID-19 pandemic. They – and all retailers – must prioritize elements of their business to be successful. The move by Amazon to “wait list” new customers shows that loyalty does have a value. However, I’m not sure this will allow them to catch up.

Dave Bruno
BrainTrust

It appears that Amazon has no choice but to make these changes. Amazon’s inability to cope with the surges in demand is one of the only major execution challenges I can recall Amazon failing to overcome. They have hopefully done far more planning about that reconsideration than I have, but I do think reducing store hours to support online order fulfillment is a great start. However, I wonder if closing some stores, entirely, including eliminating curbside pickup options from some stores is a wise move. It seems that those curbside pickup customers will simply convert to delivery customers or, if lead times are too long, they will switch grocers, no?

Oliver Guy
BrainTrust

Fascinating. One thing is clear, consumers who try online grocery are unlikely to want to go back to in-store – this is going to accelerate adoption levels. Therefore any investment in capacity is going to be for the long term – not just for now.

The U.S. market needs capacity and quickly – capacity that is elastic and can be added to rapidly. A mix of automation, humans and ecosystems will be needed to enable this – as has been seen in the U.K. with Ocado, a fully automated solution cannot scale up rapidly enough. I wrote about some of these concepts and the U.S. market 12 months ago based on projections of growth – I now feel these predictions are far too low.

Art Suriano
Guest
Amazon is dealing with new challenges every day. There are no right or wrong answers because we have never dealt with anything like this. We can’t look back and say “well, the last time we did this and we did that.” Each day grocers face new challenges — from customers being required to wear masks, to limiting the quantities of items purchased, to reduced store hours and more. As for online, it’s even harder because of the demand with most time slots booked, making it nearly impossible for customers to place orders and get their goods delivered or picked up. So I commend Amazon for attempting to stay ahead of how to handle issues. It makes sense that they are respecting their loyal customers before tending to the newbies. In the end no one is going to be happy but, hopefully, when this ends, those who had been loyal to Amazon and Whole Foods will continue to remain so because they felt the company did everything possible to take care of their needs.
Adrian Weidmann
BrainTrust

The COVID-19 pandemic artificially expedited what would have taken a much longer time to become more commonplace – the acceptance and consistent usage of online grocery shopping. We are creatures of habit and this pandemic forced us to change our definition of normal. Now that so many have been forced to use online grocery shopping and delivery services – because of the convenience, for many, this will become the new normal. Grocery stores will begin to remodel their floor plans and planograms. Center store will shrink and make way for larger backroom stocks, inventory and fulfillment while produce, deli, meats and prepared foods will become prominently featured experiences.

Herb Sorensen
BrainTrust

In other words, maybe retailers will actually pay more attention to their shoppers than to their suppliers, and their own management of 40,000 items in 40,000 square feet of store. They’ve done a GREAT job in managing SELF-service, aka the sell-to-yourself shoppers business. The shoppers themselves have done a GREAT job in selecting the FEW items they need regularly. Half of ALL shopping baskets contain only five or fewer items, ONE being the most dominant purchase. But why care about all that, when the retailers’ real obsession is with the “stock-up shopper” — a tiny minority of their regular customers?

David Naumann
BrainTrust
David Naumann
Marketing Strategy Lead - Retail, Travel & Distribution, Verizon
1 year 2 months ago

Waitlisting customers or offering ordering cycles that are up to two weeks out are not isolated to only Amazon customers. Several grocery chains are dealing with the same demand issues as Amazon. The one big customer change as a result of COVID-19 is the increase in customers that have tried online grocery ordering for the first time. Many customers may find that they like the convenience of online grocery ordering and it will become a habit which will provide a permanent boost to online grocery.

Jeff Weidauer
BrainTrust

As much as we want to, it’s difficult to fault Amazon for its failures in meeting skyrocketing demand for online services. All other grocers, along with Instacart, are struggling as well. But Amazon until now has had a reputation of making and keeping bold promises. Amazon needs to be sure it’s ticking all the boxes as it works to provide solutions. That’s not just fulfilling orders, but also worker safety and fair compensation for those on the front lines.

Kathleen Fischer
BrainTrust

The pandemic has greatly accelerated online grocery shopping acceptance. While there will likely be a fallback in online grocery orders when we reach the other side of the pandemic, it is clear that more consumers will adopt online grocery shopping as a norm.

Richard J. George, Ph.D.
BrainTrust

Amazon’s actions in this regard represent a classic advance and secure strategy. It recognizes that advances into these uncharted territories require a planned effort to secure the ground taken. In addition, placing new customers on a wait list is an example of strategic retreat. Both of these strategies are intended to allow Amazon to be better prepared for the next battle in this war.

Online will continue to flourish post COVID-19 and Amazon will have expanded its leadership position.

Ben Ball
BrainTrust

Spot on description of the right strategic approach to this situation Professor. And your comment on “strategic retreat” is excellent. Sun Tzu may not be in your bloodline, but he clearly influences your thought processes. Compliments.

Neil Saunders
BrainTrust

Converting Bryant Park to online-only is reasonable: it is in an area which is mostly commercial and not residential, and most offices in NYC are closed. Doing the same in most other locations would be lunacy: it denies those without online access the chance to shop, it reduces capacity as there’s no way a store can shift as much volume under an online only model as it can when open to the public, and it damages margins. Plus it would likely damage Whole Foods’ brand: I can’t see customers who don’t have access to other nearby Whole Foods locations being too pleased if their store shut to become online only.

Gene Detroyer
BrainTrust

In the short term this makes sense. Whole Foods has physical locations that they can turn into online-only. But more important than that is it establishes the value of having an online-only physical location. This move itself will prove the efficiency of separating the two types of outlets (and get those online fulfillers out of my retail Whole Foods).

Herb Sorensen
BrainTrust

This is simply an expansion of the “dark store” concept discussed on page 43 of “Inside the Mind of the Shopper!

Lee Peterson
BrainTrust

I believe that what Amazon is doing with some Whole Foods locations (turning them into fulfillment centers) is the future of retail, not just grocery. If you have six stores in a metro area, why not make half of them “dark” or “cloud” in order to meet online demand/provide next-day service and subsequently make the other half worth visiting by improving the overall experience? The store of the future is not a store at all, it’s half fulfillment center, half excellent experience — just ask Target.

Michael Terpkosh
BrainTrust

I know we are in a time of crisis and everyone is doing the best they can, but Amazon continues to stub their toe with their customers. When you are the biggest in your business and you make claims/promises to consumers, many who paid for Amazon because of its fast, reliable service, you must deliver the goods (literally). Others are having problems too, for example, Instacart. When the dust settles I predict a downturn in online sales because of the poor service and poor quality experience. Plus consumers will want come out of their homes, want to be in public and once again enjoy the shopping experience.

FrankKochenash
Guest

Perhaps. But Amazon has adjusted delivery promises based on capacity. It has caught grief for this in some quarters, but it has also met or beaten these promises (based on a sample of checks across my network). Their customers appreciate this. Prioritizing Prime members and wait listing new customers, due to capacity, also strikes me as a practical tactic that customers will understand, especially with the fact that almost all other retailers are struggling as well.

Also, COVID-19 is, I think, an 8-16 month event. Consumers will be concerned about safety and social distancing for the duration of this time. It will ebb and flow based on local circumstance, but the likely desire to enjoy shopping will be balanced by continued avoidance of undue infection risk.

Gene Detroyer
BrainTrust

Anecdotally, we have had a delivery order in with Whole Foods for over three weeks. I first would go to the website a few times a day to see if there were any delivery slots. There were none. Then I just went once a day. No luck. Then I was just going randomly. Then yesterday, all of the sudden a delivery slot opened up for TODAY!

Could the reason be that they closed the Bryant Park store to in-store shopping and made it exclusively for online orders? Time will tell, when I put in a new order. But it strikes me that this move was late in coming and obviously more efficient than combining in-store and online in the same location.

Gene Detroyer
BrainTrust

OMG. It just arrived.

Dick Seesel
BrainTrust

Question for panelists: Any comment on whether Amazon Fresh has been more functional than Whole Foods lately?

Peter Charness
BrainTrust

Not in Portland. I can’t get a delivery window for either of them.

Rick Moss
Staff

Same story here in NYC, Peter and Dick. The Amazon Fresh home page displays a “Delivery temporarily sold out” notice.