Amazon Puts Whole Foods, Rapid-Delivery Businesses Under Veteran Executive

By Laura Stevens Features Dow Jones Newswires

Amazon.com Inc. has consolidated its physical retail and fast-delivery operations under a veteran lieutenant of Chief Executive Jeff Bezos, according to people familiar with the m atter, as it integrates its new Whole Foods Market unit with related businesses.

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That gives Steve Kessel responsibility for Prime Now, Amazon's rapid-delivery operation, and AmazonFresh, its grocery-delivery arm, in addition to Whole Foods and Amazon's physical book and convenience stores, the people said. The goal is ease changes across those platforms as Amazon tries to reinvent the way consumers shop in stores, one of the people said.

Mr. Kessel spent years overseeing Amazon's digital strategy, including books and music; he led the team that developed the company's Kindle e-reader, launched roughly a decade ago, and its Fire tablet in late 2011. Soon after, he went on a sabbatical, returning in 2015 and heading up an effort to reimagine the in-store experience.

He was placed in charge of Whole Foods, reporting to retail chief Jeff Wilke, at the time of the $13.5 billion acquisition in August, and added Prime Now and AmazonFresh in recent weeks, the people said.

Analysts, investors and rivals are closely watching Amazon's efforts in rapid-delivery and physical retail, and in particular how it integrates Whole Foods. Potential changes, analysts say, include combining supply chains of its grocery operations and adding fast Whole Foods deliveries.

Amazon Chief Financial Officer Brian Olsavsky hinted at the strategic move during a quarterly earnings call late last month. "I think over time you'll see more cooperation and more working together between AmazonFresh, Prime Now and Whole Foods as we explore different ways to serve the customer," he said.

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Amazon has struggled in recent years to make its grocery business work. Under Mr. Kessel, AmazonFresh was recently scaled back, ending delivery in some ZIP Codes, according to the people familiar. An Amazon spokeswoman confirmed that service has been ended to select ZIP Codes.

One of Mr. Kessel's first experiments after his return two years ago was Amazon Books, a bookstore with a limited selection tailored by localized data. Prices aren't marked; instead, customers scan bar codes with their phones, which allows Amazon to study how they browse.

Mr. Kessel also is the executive behind Amazon Go, a cashierless convenience store still in beta testing that uses artificial intelligence to track customers as they grab goods and automatically check out. The store was supposed to open to the public earlier this year, but Amazon delayed that after difficulty implementing the technology, according to people familiar with the matter.

When Amazon acquired Whole Foods, it said it would lower prices, install Amazon delivery lockers and introduce Prime membership benefits for in-store customers.

Analysts have suggested Amazon is likely to incorporate Prime Now, which stocks a limited list of food and necessities that it can deliver in one or two hours, to offer orders from Whole Foods too. Currently Whole Foods partners with grocery-delivery service Instacart.

"We're going to learn with them how we can efficiently -- and in a high-quality way -- deliver groceries to our customers," said Mr. Wilke in a recent interview.

Write to Laura Stevens at laura.stevens@wsj.com

(END) Dow Jones Newswires

November 09, 2017 09:14 ET (14:14 GMT)