Editor's Note: This article orginally appeared April 19th, 2018
Well, that didn’t take long. Seven months after acquiring Whole Foods, Amazon announced this week it was discontinuing the natural grocer’s reward program, which was in existence for a little more than a year. In an email to the program’s members, Amazon informed them they have to use their points and mobile digital coupons before May 2, when the entire program—along with integrated accounts such as Recipe Box and Shopping Lists—is being shuttered. Instead, Amazon will offer rewards for Whole Foods shoppers who use its subscription-based Amazon Prime rewards program.
“We’re cooking something up. And it’s gonna be good,” Whole Foods’ website stated. “A change is coming, so we’re cleaning things up a bit to make room. A few features on our website have been retired—find out more below. And stay tuned: something great is cooking with Amazon. We can’t wait to tell you about it.”
The news was somewhat shocking in its nature, although perhaps not surprising. With its purchase of Whole Foods in August, Amazon made it clear that Amazon Prime would become Whole Foods’ reward program after certain technical integration work was complete. Amazon also began making changes to the program since taking over at the end of August 2017, such as price cuts on certain items and rewarding those who pay with a Prime Rewards Amazon credit card with 5 percent cash back. Reports surfaced last month that Whole Foods might begin offering Prime members as much as 10 percent off certain items at Whole Foods.
The switch to using its Prime program allows Amazon to collect greater purchasing insights and data on its customers, thereby allowing the ecommerce giant to offer more targeted deals, better compete with competitors like Walmart and Costco in the grocery/retail space, and increase its already long reach.
However, it also generates some questions, says Loyalty360 Analyst Steve Taggart.
“The absorption of Whole Foods into the Amazon Prime orbit is a testament to the incredible reach the Prime program has achieved, while also serving as a fascinating exploration into whether loyalty is driven primarily by brand affinity or sheer value,” says Taggart. “While existing Prime members will undoubtedly be motivated to shop at Whole Foods for the additional discounts and rewards being offered, the more intriguing indicator will be how many non-member Whole Foods shoppers choose to begin a new Amazon Prime membership as a result of the partnership. This unique scenario is yet another example of how Amazon continues to tread new ground in the e-commerce—and now grocery—industries.”