Amazon (NASDAQ: AMZN) thinks it's time to expand Whole Foods' (NASDAQ: WFM) presence in the U.S. to increase its share of the increasingly competitive grocery market. But it also has a secondary goal: to gain more Amazon Prime members by offering Whole Foods' deals that are exclusive to those who pay the $119 per-year Prime membership fee.
Whole Foods currently has about 475 stores in the U.S., but Amazon wants it to have more of a presence in the suburbs. Amazon currently is looking at possible locations in Idaho, southern Utah, and Wyoming, a source told The Wall Street Journal, which was the first to report on the matter. The new potential retail spaces were bigger than the average Whole Foods store, but Amazon could use the extra space to store inventory.
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Amazon is clearly on a mission to get as many people as possible to become Prime members and think of Whole Foods as their go-to grocery store, rather than the expensive and niche grocer that it was once thought of. But before you jump on the membership just for your grocery shopping, it's worth looking into the actual benefits that Amazon is offering.
Amazon Prime benefits available at Whole Foods
As 2019 begins, you may be on a health kick and want to shop at a healthy grocer like Whole Foods. While Prime-membership holders get other benefits such as free two-day shipping for qualifying products on Amazon's platform, the benefits below are specific to Whole Foods shopping. These perks all come through opening your Amazon or Whole Foods shopping app and scanning your Prime Code at the Whole Foods checkout.
- Extra 10% off items with a yellow sale sign (excluding alcohol).
- Sales exclusive to Prime members, as indicated by blue sale signs.
- Get select Whole Foods items delivered to your home through Prime Pantry.
- Share your Whole Foods Prime benefits with one other adult and up to four teens.
As you can see, the first two benefits focus on in-store sales you can take part in as a Prime member. Amazon says that the yellow-sign items that give you an extra 10% off the normal sale price typically apply to hundreds of products in the store. And the blue-sign items that indicate sales only available to Prime members change weekly and are applied to select best-selling items in the store.
The other two benefits also could save you money and time because you can have certain items delivered instead of driving to the store, plus other family members or friends can use your Prime code for the same perks.
Other Amazon Prime benefits to consider
Amazon knows that if it can entice Whole Foods shoppers into a Prime membership, they'll probably start shopping on Amazon.com more often to take full advantage of the benefits. It's all about pulling customers into the growing Amazon ecosystem. So if you're on the fence about whether the Whole Foods perks make a Prime membership worth the cost, it's worth looking at the other benefits you'd receive by using Amazon's shopping platform.
- Ever-expanding fast and free delivery options: These include free two-day shipping on more than 100 million items; free one-day delivery in more than 8,000 cities and towns; free same-day delivery in 8,000 cities and towns when you spend $35 or more; and free two-hour delivery (or one-hour delivery that sometimes requires a small fee) on tens of thousands of items in over 50 cities with Prime Now.
- Access to tens of thousands of movies and TV shows on Prime Video: This includes Amazon original series, including the Golden Globe-winning titles Transparent and Mozart in the Jungle.
- Access to over 1 million songs through Prime Music: Prime members have unlimited ad-free listening hours with the service.
- Unlimited photo storage through Amazon Cloud Drive: Members get unlimited full-resolution photo storage plus 5 GB of video storage.
How valuable these benefits are to you will depend on how often you shop on Amazon's platform and how often you use the other services. However, consider the fact that both Apple Music and Spotify Premium cost $9.99 per month, which adds up to about $120 a year. That's the same cost as an Amazon Prime membership, which also comes with Whole Foods deals, a multitude of fast and free delivery options, as well as video streaming and cloud storage.
If you're still unsure about dropping $119 on a Prime membership, you can always do the 30-day free trial or pay $12.99 on a month-to-month basis. But if you do the free test drive, be sure to cancel before the end of the 30 days if you aren't satisfied, or your credit card will be automatically charged.
As we start a fresh year, you may have new financial goals. So the most important thing when considering a Prime membership is that you know how much you'll take advantage of the benefits before dropping the lump annual sum.
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John Mackey, CEO of Whole Foods Market, is a member of The Motley Fool's board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Natalie Walters has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.