UPDATED 13:07 EST / DECEMBER 31 2018

APPS

Report: Amazon planning broad Whole Foods expansion to boost Prime

Amazon.com Inc. reportedly plans to expand its brick-and-mortar operation to more parts of the U.S. as part of an effort to boost its fast-growing Prime service.

The push was detailed by the Wall Street Journal on Sunday. According to the sources who spoke with the publication, the expansion plan centers on Whole Foods, the high-end grocery chain that Amazon acquired for $13.7 billion in 2017.

Most of the 475 or so Whole Foods stores currently up and running are clustered around metropolitan areas in coastal states. Amazon is said to be looking to expand the chain deeper into the suburbs, as well as into more inland locations. One of the sources who spoke with the Journal about the initiative said that employees from the company have been scouting possible Whole Foods venues in states such as Idaho, Wyoming and Utah.

The expansion is reportedly part of a broader plan to widen the reach of Prime Now. That feature enables Prime subscribers in select cities to have grocery orders delivered to their homes within two hours. Alternatively, users can pick up the goods themselves from a nearby Whole Foods store in as little as a half-hour.

Amazon’s reported effort to scale up Prime Now seems to go beyond just opening new locations. According to the Journal, some of the venues the company is eyeing are about 2,000 square feet larger than a normal Whole Foods store. That extra room would presumably be used to accommodate Prime Now operations.

Bringing Prime Now’s two-hour delivery to more consumers could be a good way for Amazon to strengthen its Prime service, which provides access to fast shipping, discounts and other perks for a monthly fee. It passed 100 million subscribers earlier this year.

Reducing delivery wait times would also strengthen Amazon’s competitive position across the board, since fast shipping is seen as one of the main drivers behind the rapid growth of e-commerce. That’s why traditional retailers are jumping on the train as well.

Wal-Mart Stores Inc., Amazon’s biggest rival, last year acquired a same-day delivery startup Parcel Inc. for an undisclosed amount. Walmart more recently started experimenting with robots to reduce wait times for customers using its grocery pickup service, which competes with Prime Now.

Photo: Amazon

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