While brick and mortar stores haven’t died out completely, the pandemic hasn’t done them any favors. Not being able to leave the house due to COVID-19, many consumers are realizing that it’s not only easier to shop online for their household consumables, but that it’s preferable to having to run out to the store when the pantry starts running low.
Whole Foods, for example, has done incredibly well, owing largely to its owner, Amazon. Much like Walmart, Target, and Apple, Whole Foods, and Amazon have seen some incredible growth in their grocery sector.
“During Amazon’s second quarter of 2020, the retail giant continued to see huge gains overall due to the impact of COVID-19, with online grocery sales alone reaching three times last year’s figures,” reads an article from SupermarketNews.
The second quarter, which ended on June 30, 2020, left Amazon with an overall net income at a staggering $5.2 billion, compared to the $2.6 billion during the same quarter last year. It should come as no surprise that net sales surged 40% from $63.4 billion in 2019 to $88.9 billion.
While the pandemic was at its full height and lockdowns were initiated, consumers took to their keyboards to go shopping.
Spending Money to Make Money
Of course, with higher than average sales comes higher than average operating costs. As Amazon conducted more business, it also had to increase its operating costs to keep pace with the influx of new orders.
Amazon created over 175,000 new jobs since March and are in the process of bringing 125,000 of these employees into regular, full-time positions
Jeff Bezos, founder and CEO, noted in a statement, “As expected, we spent over $4 billion on incremental COVID-19-related costs in the quarter to help keep employees safe and deliver products to customers in this time of high demand — purchasing personal protective equipment, increasing cleaning of our facilities, following new safety process paths, adding new backup family care benefit, and paying a special thank you bonus of over $500 million to front-line employees and delivery partners. We’ve created over 175,000 new jobs since March and are in the process of bringing 125,000 of these employees into regular, full-time positions.”
Amazon’s Grocery Sales Continue to Grow. Rapidly
It’s hard to believe that Amazon originally started as a bookstore. Now it’s become a full-service virtual grocery store, which has been paying dividends for the once bookseller.
“Amazon’s second quarter was another highly unusual quarter,”says Brian Olsavsky, chief financial officer & senior vice president. “As I mentioned on our last earnings call, we began to see a significant increase in customer demand beginning in early March, and demand remained elevated throughout Q2. Strong early demand in groceries and consumable products continued into Q2, while demand increased during the quarter in our other major product categories like hardlines and soft lines.
Amazon, which owns more than 500 Whole Foods stores, said it increased grocery delivery capacity by more than 160% and tripled grocery pickup locations during the second quarter
It was only three years ago that Amazon bought out Whole Foods, which gave it the necessary oot in the door to begin selling groceries online. While this move garnered some criticism it turned out to be a smart move on Amazon’s part in the long run. “Amazon, which owns more than 500 Whole Foods stores, said it increased grocery delivery capacity by more than 160% and tripled grocery pickup locations during the second quarter,” says SupermarketNews.
“We’re reaching more customers with our grocery offerings,” said Olsavsky. “Online grocery sales tripled year-over-year.”
Getting in is the Easy Part
Obviously, being a supplier for a company like Whole Foods is ideal, especially when you can indirectly hitch your star to Amazon. However, becoming a supplier for Whole Foods is the relatively easy part. On the other hand, living up to their high standards and demands is where things get decidedly more difficult.
If you’re thinking of becoming a supplier for Whole Foods or want to understand better what it means to be a supplier and how have requirements and the business changed now that they are part of the Amazon juggernaut, read our Whole Foods white paper.