How will Amazon replace Whole Foods’ rewards program?

Discussion
Photo: RetailWire
Apr 19, 2018
George Anderson

Here today, gone — maybe not tomorrow, but pretty soon. That’s the story of Whole Foods’ rewards program. Members received an email earlier this week announcing that, “A change is on the way!”

The change referred to in the email from the organic grocery chain said that members will no longer be able to access their accounts on WholeFoodsMarket.com after May 1 and that digital coupons will no longer be available through the retailer’s app or online.

As to what’s coming next, all the email had to say was that Whole Foods was “cooking up something great with Amazon and we can’t wait to tell you about it.”

Speculation is that whatever replaces Whole Foods’ program will be tied to Amazon Prime. Amazon has already begun integrating its subscription program with Whole Foods via home deliveries in select markets through Prime Now as well as offering holders of the Amazon Rewards Visa card five percent cash back on purchases.

Prime members are some of Whole Foods’ best customers, spending an average of $1,371 at the chain on an annual basis, $306 more than non-Prime members, according to 1010data.

DISCUSSION QUESTIONS: How do you think Whole Foods will replace its loyalty program? What do imagine is the reasoning behind dropping the program? Will whatever change is made be more geared to getting a bigger share of current Prime members’ retail purchases or acquiring new members?

Braintrust
"Amazon apparently has a different vision for Whole Foods, and it will continue to integrate them into the Amazon way of doing business."
"Good loyalty programs gather, understand and use customer data to create experiences and drive behavior — something Amazon is an expert at."
"Amazon runs a centralized scaled system ... logistically it makes sense to offer a united front even for loyalty. It’s both a strength and weakness."

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10 Comments on "How will Amazon replace Whole Foods’ rewards program?"


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Lyle Bunn (Ph.D. Hon)
BrainTrust

Too often loyalty programs are focused on fulfilling marketing goals rather than inspiring the brand/retailer/consumer relationship. Loyalty should profile the values that each stakeholder share and inspire the journey toward discovery and advancing the perspective of the customer related to their capabilities and strengths. Harmonizing loyalty programs across business units offers some good economies of operations and marketing, but their reason for bringing value to consumers must be the foundation of all change.

Art Suriano
BrainTrust
Amazon apparently has a different vision for Whole Foods, and it will continue to integrate them into the Amazon way of doing business. Amazon Prime is a huge success, and I can see why they would want Whole Foods customers using it and not some other program. Since the takeover, Whole Foods has changed prices and the way it is doing business. I would expect to see more changes. No one should have thought Whole Foods would remain the way it was. That hardly ever happens when a company gets purchased. I wouldn’t be surprised if Amazon buys a second food chain and possibly a third, over the next few years and merges the chains together and at some point, expect the name to change from Whole Foods to Amazon Foods. Amazon is committed to being the most prominent brand it can be, and that is happening. There is nothing wrong with that … many would say it’s smart business. But for those that were loyal to a brand, it’s hard to accept the changes.
Brandon Rael
BrainTrust

The current Whole Foods loyalty app simply did not provide significant enough value. Too often once you submitted your app to the cashier, more often or not, the savings simply weren’t there. As loyal customers, and in a post-Amazon acquisition world, one would expect that the doors will be opening at Whole Foods for Amazon Prime members to have exclusive access to members-only savings, percentages off your purchases, as well as a more personalized experience, as Amazon/Whole Foods will absolutely have much more of your personal data, and shopping preferences.

In addition, one would expect a more seamless checkout process in Whole Foods’s faster-paced locations. Simply submitting your Amazon app to be scanned at the register will enable consumers to pay with all their payment options within their prime account. It’s also a prime opportunity for loyal Whole Foods customers to accumulate loyalty points, that translates to cash back, or free products etc.

Neil Saunders
BrainTrust

Like a lot of Whole Foods things, the loyalty program was ineffective and rather lackluster. On the app the other day, there was one coupon available in my store — yes, just one! I also very rarely received discounts at the register.

Amazon will do a much better job, and indeed it already has with its generous cashback rewards for Prime credit card holders. The new scheme is also likely to be linked to Prime and will probably be available to all members, not just Prime credit card owners.

Behind the scenes, Amazon will make good use of the data it is gathering. Maybe Whole Foods did something with the data it collected, but I never saw much evidence of it!

Sterling Hawkins
BrainTrust

Good loyalty programs gather, understand and use customer data to create experiences and drive behavior — something Amazon is an expert at. I have no doubt about Amazon working through the back-end of bringing Prime into Whole Foods to both drive larger baskets from existing customers and acquire new customers. Driving synergies across the business makes good sense and I’m sure will provide new value for the shoppers and the bottom line.

Michael La Kier
BrainTrust

Having run a large scale consumer rewards program (My Coke Rewards), I know intimately how difficult it is to make a significant change to an existing retail program. The reasoning? Simple, the program no longer fits with the owner’s business model. The result? Shoppers loyal to the program (whether they were “valuable” shoppers or not to the retailer) feel betrayed; an email saying “great changes are coming” without detail does nothing to re-build that trust.

Craig Sundstrom
Guest

“A change is on the way!” Ronald Reagan not withstanding, those are really the most feared words in the English language.

Obviously, I don’t know what the changes are, and of course not every change is a bad one, but underestimating current benefits and/or overestimating “improvements” is a common theme in many a corporate boondoggle. Companies that begin with a cult-like following often have difficulty maintaining that relationship with their customers as they get larger, and while Whole Foods seems to have been successful in the transition, that can always change — so tread carefully, Jeff.

Ken Lonyai
BrainTrust

I don’t think anyone is surprised by this. Amazon is going to keep folding Whole Foods into their core operations and mindset and streamline every aspect possible. With 100 million Prime members globally, Amazon runs a centralized scaled system whereby logistically it makes sense to offer a united front — even for loyalty. It’s both their strength and weakness.

Whole Foods was already transitioning to centralized buying before being acquired and it has been problematic. A new loyalty program may be unique to Whole Foods or it may (likely) be Prime or a flavor thereof because Prime works. But as the local vibe goes away and mainstreaming continues, Amazon will box itself into a corner built on price and delivery, loyalty program or not. While they are two strong pillars, opportunities widen for competitors that approach customer value differently.

Min-Jee Hwang
BrainTrust

There is significant overlap between Whole Foods and Amazon customers. Rolling up their loyalty programs into one simply makes sense, instead of coping with redundancies. I think the new program will incentivize shoppers to buy more from Amazon and Whole Foods. If the perks are worthwhile, it could add to Amazon’s already massive 100 million Prime subscribers.

Ken Morris
BrainTrust

All signs point to Amazon combining the rewards/loyalty program of Whole Foods with Amazon Prime. It makes sense. The Whole Foods loyalty program was not a big draw for its customers, but Amazon Prime has been a big draw for consumers – now more than 100 million members. I am a member of the Whole Foods program and only used it a few times as a novelty. Amazon Prime is ubiquitous and will allow Amazon/Whole Foods to understand much more about their customer base. Not only what they watch and buy, but now what they eat.

Since most Whole Foods customers are most likely Amazon Prime members, it will be an easy transition for those customers. The Amazon Prime members that are not typically a Whole Food customer represent an opportunity, as Amazon can offer special offers for those customers to try Whole Foods.

wpDiscuz
Braintrust
"Amazon apparently has a different vision for Whole Foods, and it will continue to integrate them into the Amazon way of doing business."
"Good loyalty programs gather, understand and use customer data to create experiences and drive behavior — something Amazon is an expert at."
"Amazon runs a centralized scaled system ... logistically it makes sense to offer a united front even for loyalty. It’s both a strength and weakness."

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