How Amazon’s Move to Hike Whole Foods Prices Will Affect It

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Amazon is hiking Whole Foods prices

Amazon’s (AMZN) $13.7 billion acquisition of Whole Foods back in 2017 was followed by price slashes on a number of items. The company’s first real foray into brick-and-mortar retail was also followed by its slowly tying its Prime membership up with Whole Foods.

However, the e-commerce giant is now beginning to hike prices at Whole Foods, according to a report by the Wall Street Journal. According to the report, Amazon has had to increase the prices on several items due to inflation. The report says that over 550 products have gotten more expensive at the grocery chain.

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Prime members will receive a discount at Whole Foods

Grocery stores are usually low-margin businesses. While organic food stores such as Whole Foods can operate at better margins, their margins aren’t much better. Increasing costs usually mean that grocers have to pass them on to customers to protect their margins when possible.

Last year, Amazon hiked its prime membership rate from $99 to $119 annually in the United States. The tech giant has been ramping up the offers available under the Prime membership ever since.

However, the hike in membership rates may have negatively affected Prime membership growth, as Amazon’s revenue from subscriptions slowed in the fourth quarter of 2018.

Prime members can receive discounts of ~10% at Whole Foods stores. While the price hike at Whole Foods could put them off a bit, prime members may remain loyal to Whole Foods given that they can take advantage of the discount.

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