2/17/2021 Amazon and Whole Foods: How 2-Day Shipping Could Become an Hour or Less | Barron's

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Amazon and Whole Foods: How 2-Day Shipping

Could Become an Hour or Less
By William Davis and Evie Liu June 28, 2017 4:33 pm ET

For Amazon.com, the significance of its Whole Foods purchase is about much more
than just organic foods. The nationwide network of 444 Whole Foods stores would put
Amazon within a one-hour drive of over 70% of the U.S. population, roughly 224 million
people, a Barron’s Next analysis shows.

Barron’s Next analyzed Whole Foods store locations, AmazonFresh fulfillment centers,
U.S. census data, and a database of driving routes to measure the impact of an
Amazon-Whole Foods combination. The result is a potential game changer for Amazon,
which has been fortifying its “last-mile” delivery network, while also trying hard to crack
into grocery sales.

Ten years ago, Amazon rolled out its grocery delivery service AmazonFresh in hope of
tapping into the online grocery market. Its total grocery sales in the first quarter of 2017
was estimated at $350 million according to e-commerce data provider One Click Retail.
Despite an impressive 30% year-over-year growth, it’s a fraction of the industry’s $150
billion in sales during the same period. Whole Foods on its own had $4.9 billion in
sales.

Amazon and Whole Foods blanket Northeast

One-hour drive time estimates from Whole Foods and AmazonFresh/Pantry locations

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2/17/2021 Amazon and Whole Foods: How 2-Day Shipping Could Become an Hour or Less | Barron's

AmazonFresh/Pantry fulfillment center

Existing one-hour coverage

area for AmazonFresh

Boston

Whole Foods store

One-hour drive from a Whole Foods

New York

Philadelphia

Baltimore

Washington D.C.

Note: Population estimates are based on 2015 numbers. Drive times are based on OpenStreetMap isochrone
estimates.
Source: Whole Foods Market, MWPVL (Amazon locations), U.S. Census Bureau, OpenRouteService, Natural Earth

Amazon has a large logistics network around the U.S. with over 100 fulfillment centers,
where products are stored, and more sorting centers, where packages are filtered by
zip code and then sent to the local post office for the last mile of delivery. The company
is hiring more of its own last-mile carriers, as well, and still uses national shipping
services like UPS and FedEx to send packages from fulfillment centers directly. This
multi-layer network means that almost all Amazon Prime members in the U.S. get two-
day delivery.

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2/17/2021
MORE ON AMAZON AND WHOLE FOODS
Amazon and Whole Foods: Is This a
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at Whole Foods
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partly in the distribution.
Amazon and Whole Foods: How 2-Day Shipping Could Become an Hour or Less | Barron's
But delivering groceries for
AmazonFresh is a different story. Unlike
the ubiquitous coverage for Amazon
Prime, AmazonFresh has only been
available in selected metropolitan areas
including Seattle, San Francisco, Los
Angeles, New York City, Philadelphia,
Baltimore, Boston, Atlanta, Dallas,
Chicago and Denver. The challenge lies

Fresh produce and perishables require specialized warehouses with refrigeration and
frozen storage. According to MWPVL, a supply chain consulting firm, out of all of the
Amazon fulfillment centers, roughly 16 are dedicated to AmazonFresh and Amazon
Pantry and a few others are partially used for food.

Fresh food also requires special delivery conditions, where items are packed with either
ice packs or dried ice. Amazon has built its own last mile delivery system with the so-
called “delivery stations.” Normally located in suburbs or airports around big cities,
these stations receive and pack grocery orders properly and deliver them directly to
customers on a same-day basis. But still, the delivery stations are typically outside of
city-centers and away from the most populous areas. That’s where Whole Foods could
come in.

Amazon is moving closer to its customers in major

cities
Most of New York City is within a ten-minute drive from a Whole Foods

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2/17/2021 Amazon and Whole Foods: How 2-Day Shipping Could Become an Hour or Less | Barron's

Drive times from Whole

Foods stores
5 min. 30 +

15 minute drive
from a Whole Foods

10 min.
2 miles

5 min.

Whole Foods store Bronx

AmazonFresh
fulfillment center
Queens

Newark

Brooklyn

Staten Island All of Manhattan is within

a 10 minute drive of a
Whole Foods location
Amazon is reportedly
opening a distribution
center in Staten Island

Note: Drive times are based on OpenStreetMap isochrone estimates.

Source: Whole Foods Market, MWPVL (Amazon locations), U.S. Census Bureau, OpenRouteService

The acquisition makes one-hour deliveries a real possibility, assuming Amazon can also
tap into its prowess to streamline the ordering and packaging procedure.

For Whole Foods loyalists, Amazon could continue the in-store shopping experience,
adding a streamlined checkout experience, and perhaps, Prime loyalty benefits.
(Currently, AmazonFresh only offers grocery pickup at two locations in Seattle.)

For shoppers not as devoted to a local Whole Foods store, Amazon could turn the
whole process into an e-commerce transaction, from beginning to end.

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